judging by the price action looks like now everyone will tender for the buyback … what is the expected acceptance ratio ?
Simple math:
Total shares outstanding: 51.7 Crore
Buy back size: 460 Crore less tax of 12 Crore = 448 Crore
Buy back price: Rs. 680 per share
Number of shares that will be bought back: 6.58 Crore
Acceptance ratio: 12.72%(6.58/51.7)
Expect the retail acceptance ratio in the range of 13-18%, considering 15% of the total buy back will be reserved for retail .
AJ
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Think that’s too low considering the size of the buyback relative to company’s market cap.
Based on my experience of last 7-8 buybacks, I think the actual acceptance ratio for retail will definitely be more than 25%.
When will the buyback be open ? I mean submission through broker sites.
I couldnt see BSE being listed in hdfc securities buyback screen.
The buyback date has not been finalized yet. If you are a shareholder as on record date, you will be notified.
Refer:
Again as per simple Maths, the ex buyback price assuming 12.72% Acceptance,should have been around 542, why is the market punishing this stock so much more?? any additional business related news, or general panic selling??
100 shares bought at 560 prior to ex date = 56000 invested
12.72 shares bought back at 680 = 8649.6 earned by tending shares in buyback
87.28 remaining shares at 505 = 44076.4
So value erosion for those who bought just for buyback =56000-8649.6-44076.4 = 3274 (5.85%)
Its a panic + worry. Worry because market is going down hence the sentiments and less volume transacted on bourses hence lower revenue. Though the drop should not be that high as people will sell. In my opinion its a short term pain and price will recover when sentiments are back.
Discl: I have a large chunk of BSE in my PF. My views could be biased.
Value erosion is happening across market. 80% chances if one would’ve invested in any other share around the same time, would have faced similar losses.
From slightly longer time frame, current price looks super attractive, considering buyback will reduce the equity by ~13%.
Disc: invested and adding
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Hi, I have been following BSE since last 1 yr. Once entered at 650 and exited at 600 as had some better opportunity to invest.
But yesterday when I searched for ‘ALL TIME LOW’ stock, in that list BSE Ltd popped up. Here is the link to find out the same.(https://www.edelweiss.in/market/deep-dive-into-stock-markets/all-time-low-stocks-nse-bse)
Now I wondered, when many names in that list are obvious ( Cafe Coffee day, JP Asso, Cox & Kings)why the debt-free , asset-light and non-capital intensive BSE should feature in that list.
Now I am a HOBBY investor and weak in calculating numbers. So saw few videos. And then came across this latest interview by their MD.
I listened to it twice. Now here he himself is saying that their Net Sales are down YoY. And their main income is from IPO listings. Though their daily INX volumes are increasing, their commodity and futures are also increasing MoM BUT they are not charging any commision. Even for MF, they have started charging only after 9 years. So dont know when will they start charging commission on the INX.
And it’s obvious by seeing the trading volumes of stocks, that volumes are nearly 5-10 times more on NSE. And BSE main income is from IPO listing.
Now consider yourself as a company interested in listing, where would ‘LOVE’ to list. The obvious answer will be NSE.
and if he says there were not many IPOs in 2018, what to say about 2019?
One thing I have seen in market in my experience of say 10 years.
YES. MARKETS ARE NOT EFFICIENT ALL THE TIME. But ‘MOST’ of the time Market is efficient. It knows something thats why the stocks are beaten down.
So basically what market is asking BSE is " Show me the Money Honey"
The ‘n’ number of buybacks / hefty dividends are not going to lift this stock up. Its only the increase in Net sales thats going to do the trick.
So Now the Million Dollar Question is “WHEN”
These are my personal views.
Regards,
Vikas
9 Likes
In 2014 they had 0% market share in currency derivatives… Now they have 50 % market share. BSE should be treated as just 10 years old bourse. Its past was notorious and their compliance was bad. Only in the last 5-6 years technology upgrade and compliance has improved. A better technology gives a huge edge for derivatives… soon market will realise as they did with currency derivatives.
If you read the posts above it has been clearly demonstrated that INX volumes are growing month on month. They wanted to start charging from 2018 and 0.2 $ per share was also decided. But NSE being a non listed co flexed their muscle and not charging anything. So BSE had to withdraw the plan. In GIFT city INX has nearly 90% market share. I expect NSE to come up with IPO as it was planned while ago. They appealed to SAT colocation scam.
BSE has decent market share in everything except cash and stock/index derivatives. Interoperability has kicked in last week and all segments, and everyone expects that some volume will shift to BSE but it will take its own time.
In my opinion, BSE has nothing much to loose here and they are rebranding themselves to a e-commerce platform for financial products. On the other side, StarMF, INX are growing. E-bix and power exchange yet to come…
My views are biased as I hold and I can be wrong. Please do your own analysis before buying.
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They are terrible capital allocators, They have done two buyback since listing at horrible levels completely value destroying for shareholders.
They don’t have any strong business apart from cash yielding below average returns.
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exchanges or securities business in general are cyclical. they are driven by market activity of the participants. ipos+trading activity. so rev/profits are expected to go down when the markets are making lows which usually coincide with lower trading value and low number of new ipos etc. and therefore it would be correct for the stock price of such businesses to go down as well. but, like all cyclical businesses - its better to buy closer to the cyclical bottoms vs the tops. so long as you can be sure its not going out of business. so its not at all unusual for this to be lower like the rest of the securities businesses like i-sec -30%, motilal -44% for the year.
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how do you value starmf?
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Now u know where the Moat is -
not discussing re any moats here at the moment. just how do you value this? surely it cant be worth 0 because of that tweet?!
for the full month end jul-19 it had 4.3m txn vs for jul-18 it did 2.6m txn.
last year it was charging a blended rate of Rs 8-9. this year it might be Rs. 14-15.
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If you will check coin’s current offerings, bse start mf’s offering, HDFC MF is still offering all their products other than passive index funds on the platform.
As per HDFC AMC’s annual report passive funds formed less than 1100 cr of their 1.65 lac crore equity AUM and 3.4 lac cr total AUM.
If you want to speculate on the existence of BSE Star MF’s moat, it would be better to check why now majority of AMCs are partnered with them, why are they paying and where are the transactions coming from.
Removal of one scheme which is anyway currently irrelevant to both parties does not say anything about their moat. Specially when the said AMC has listed new NFOs on BSE STAR repeatedly after that and are continuing their other schemes on the platform.
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At what levels would the buyback have been value accretive, please tell?
Hi Vikas,
Absolutely valid points made by you. Yes this is not a growth compounder like many other businesses but at current valuations it is a definitely worth looking into.
Addition to ones portfolio will depend on the individual but for me I see it as a quasi debt bet with an added optionality of equity like returns for the long term investor from its new segments in the coming decade.
The dividend yield brings a floor to the price, but where the floor is no one knows.
The dividends themselves are currently coming from established segments while the new segments are yet to perform. Once they add to the bottomline as well the dividends will increase, perhaps for an investor at current levels the shares could be totally free in 12-15 years time. And i doubt anyone here would bet that BSE will not exist for that timeframe.
Yes it doesn’t deserve a huge chunk of ones portfolio, but it does deserve some place as a risk free bet where dividends will keep coming in and even increase in mid term with long term optionalities.
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I also agree with your views. In fact, BSE can be what Mohnish Pabrai says- Heads I win, Tails I dont lose much.
Means , downside can be less and upside can be hugh. But how market will react to the proposed NSE IPO is one worry. And when it will show the consistent increase in the sales in the ?
Anyway, will be keeping it on my watch-list.
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True.
I also strongly believe, BSE will EXIST even in distant future. Won’t vanish.
But I am worried about the uncertainty of the ‘Floor/bottom’ of BSE Ltd. Especially as i have seen it falling from 750 to now 500 level.