Voting for divestment/Sale of Majesco India’s stake in Majesco US begins, just received email notice earlier today:
Fabulous numbers. With or without Bravo, the stock is clearly deserving a much higher price.
In the concall the management indicated that the money transfer to shareholders would happen expeditiously but be prepared to wait maybe until June. Also the mode is being worked out to best suit investors.
Given the uncertainty on the timing and the mode of payment, the stock cud see selling pressure starting Monday becoz many investors/ traders may not see sense to wait that long.
Given that buyback is restricted to 20% of reserves the breakup seems very low for buyback. The major chunk will be dividends.
I think it makes more sense to sell at the current prices than wait on.
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Even If the payment distribution happens by June it’s still worth holding the stock in my opinion since we will still make another 25 to 30% assured return which is pretty good.
I wud like to do a call with someone to discuss this subject. If interested, plz email me on vagator10 at gmail
It’s not that simple. Besides, when a company goes into liquidation, the income tax dept stakes a claim and these types of things make it a long drawn process. Secondly I’m not sure if capital gains I.e.proceeds of mjco sale received into majesco can be paid as dividends.
Today duck creek listed around $4500 million valuation, other pe players should come forward before shareholders approval for better bid
Just heard in concall that promoters have signed an agreement with thoma bravo that for there 50% shareholding ie 19% of total they will vote against to any new offer!
Can still deal price be increased @paragbharambe sir?
Any thoughts on why Majesco shares are quoting at such a discount to its value in the Indian stock market? Even without any additional increases beyond the $16.00 already offered by Thoma Bravo the script should be quoting closer to Rs 1000.
The stock is quoting at the potential after-tax receipt assuming mostly dividends.
Thats because eventual tax has to be paid out by many shareholders for instance dividend tax at marginal rate of taxation will work out to 30%-40% for many shareholders and then on the 25% amount which can come through buyback - there will be a buyback tax of 20%. And then there is an interest cost element of almost 9 months wait from now.
Warren Buffett early partnership letters to investors captures this concept beautifully - while many investors calculate their networth as just market value of securities held by them, Warren being the genius he always have been, use to calculate his networth as market value of securities minus the capital gains tax to be incurred if all the securities were to be sold today.
Regards,
Sarvesh Gupta
Disclosure - I run a SEBI registered investment advisory. Invested from lower levels from myself and clients.
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Dear @8sarveshg, am struggling with this question. Hope you can throw some light on the same please.
Today we see a brilliant arbitrage - a share of Majesco (CMP 757 odd) can bring in cash of approx Rs.1000, may be in a year or so. But once we are thru with the cut off date, one share of Majesco will not be equal to CMP. Because there will be nothing left in the company as the basic Bread & Butter is gone. There will be down circuits only (unless of course, the company decides to de-list at a hefty premium. Or something else which I couldn’t imagine).
So, why not sell today and cash in whatever is available…how to approach this?
Thanks & Rgds.
I think most people have short/long term capital loss due to sliding of the market since jan '18. Isn’t it prudent to book gains and set it off with the capital loss?
I agree with Saji. Also, if a shareholder does not have any other income and come under exempt/low tax bracket categories, they can make good amount even buying at 750 levels, as the payout will be more than 1000 rupees in a year max from now
The interests of minority shareholders in the listed Indian holdco are completely aligned with the promoters. Presumably the promoters will make best efforts to find the most tax efficient way of distribution - if they can find a company to purchase the entire company the taxation becomes cap gains and they will be the biggest benficiaries. Logically that is the win win solution for all the Majesco India shareholders - provided such an acquirer can be found - a discount to cash may be necessary to attract a bidder.
Hi,
U mentioned “once we are thru the cut-off date”; Wat’s the cut-off date here. Did you meant the record date for shareholders to be considered for takeover payout? Dat record date seems to be easily 9-10 months away for now
well, I sure hope so. Having lost my entire investment in LEEL, I definitely won’t give this possibility a 100% chance.
All I am saying is that let’s not take a black/white stance, there is a non-zero possibility of entirely losing your investment, so size your position and exit accordingly.
Disc: Long Majesco since a long time, is a multi bagger for me.
Promoters buying from the market! https://www.bseindia.com/stock-share-price/majesco-ltd/MJCO/539289/disclosures-insider-trading-2015/
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