Investor presentation. Excellent results and 4 rs dividend
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Understand regulation on facebook , google to pay fees to newspaper companies for the news they publish is underway. If materializes, it could be game changer for Jagran !.
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Meeting for buyback
What could be the significant impact because of this news ? Why promotors are buying back quiet often ?
Building on my previous buyback speculation:
Look at the current state of the company:
- Marketcap is 1750cr > generating a solid cashflow of 300+ Cr . i.e Price/Cashflow is below 6.
- 800 Cr sitting in Mutual funds, Bonds, Bank deposits & Cash. i.e 1/2 the marketcap is available as liquidatable cash.
- 70% is already owned by the promoter, 10% is with HDFC ,12% with retail&HNI folks and rest with NRI’s FPIs & corporate bodies. - Concentrated shareholder a good sign for delisting.
- Despite being in a sunset industry, the business still has solid acquisition proposition for large media tech companies.
What would any sensible promoter do? buyback and increase their shareholding to a regulatory max of 75% & Pursue delisting attempts @ book value or slightly higher. Look for a strategic partner who can add complementary strengths [Like Sharechat(35kCr valuation] ] and move forward.
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Buy back
That seems like a pretty lousy buyback price, given they are well positioned for much better profitability in a quarter or two and possible other growth options like their digital app, radio (plus potential revenue sharing with Google) appearing to be shaping up well. What happens if you don’t tender and promoters end up attempting to delist (assuming their stake goes over 75% post buyback)? Do you have to just tender your shares at whatever price they announce then? I recall Ineos Styro trying to delist a few years ago, and they were not successful then.
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As per new sebi delisting rules it is not easy to delist without reverse book built. So your assumption is wrong in that way. Yes if no other tender shares in offer , then promoter will try to adjust in a way that their shareholding reach 75 %.
Thank you. I read this article - All you wanted to know about reverse book building - The Hindu BusinessLine. Gave me more clarity. One question - Is the reverse book build process like a secret ballot, i.e. will the price at which various shareholders offer their shares be not known till the end? I guess the discovered price will largely be driven by the price at which 1-2 key large stakeholders (e.g. HDFC MF) offer their shares, given this is not owned widely.
Anyway, this is hypothetical. Maybe they don’t plan to delist, but just seems like that may be the way they are heading.
Reverse book build is complete open and transparent and available daily on bse and nse. One can check how many shares tendered and at what price and take decisions
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For me it’s interesting as well as confusing buy back. What’s company’s intention ,to increase their share holding or reward shareholder as well as promotor ( wich they have right and it’s legal ) .?
They are going for buy back of 17.5 % capital And they have shown their intention that they may also offer shares in buyback. So practically they are reducing their own shareholding at 75 rs y tendering, That also if we assume all shareholder tender shares. If hdfc don’t tender then their shareholding will decrease more from 70 % @75 rs which I fail to understand the logic behind it.
Either they will have to increase tender buyback price from 75 to 100 or more so other offer shares in buy back.
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Currently, promoter holding is 69.4%. Public holding is 17%, DII is 10.4% and FII is 3.1%. If public offers up at least 50% of their present holding and FIIs offer up 20% of their present holding, the promoter shareholding will actually go up after the buyback even if HDFC only tenders a very small number of shares. It will go up over 75% actually. If HDFC offers up a bit more, promoter holding can go up to 78-80%.
Looks like the objective may be to get public holding to a small number and then go for delisting. But if reverse book build is transparent as you have clarified, then staying invested could pay off. Of course, all this assumes the business does well and there is not something else going on. It’s more or less a bet on the management’s ethics.
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Buy back rules link you have posted is old . New rules , SEBI have tried to plug many loopholes. They can’t do delisting without informing their intention in advance to exchanges, that also has to be done reverse book build only.
They can do buy back but their holding if goes up more then 75 % then even extra single share also above limit has to offloaded in exchange within one year.
And that’s why I was confused about benefit of this buyback
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Hi,
Before speculating into promoter’s plans of delisting the company, we should atleast make coherent statements. If buyback price is not attractive and only promoters tender their shares, then promoter shareholding will go down (and not up). This is not the first time its happening in a company, I was involved in a buyback in Nalco in 2021 where buyback price was actually lower than CMP and government majorly tendered their stake. What happened after that? Government’s stake went down (and not up).
Also, about your comments about some secret delisting ballots, its not how delisting works. The reverse book building process is completely transparent, where you can actually see (in real time) how many shares are getting tendered along with the tender price. So I would request not to speculate, unless there are reasonable grounds for the same.
Disclosure: Invested (position size here, no transactions in last-30 days)
Thank you. So what you are also saying is that as per the rules they have to necessarily announce their intention to delist before taking their holdings over 75% - is that correct?
I did not know how the delisting/reverse book building process works - I was asking a question if the price is open/transparent during the reverse book bidding process or will it be secret as I couldn’t make that out from the few articles I read. @HIMSHAH clarified that it is open and transparent. So that’s that. Not sure why you think I was making some claim that it’s secret.
Regarding the buyback, whether 75 is an attractive price or not is in the eyes of the beholder. In my view it is not, but for some people it may well be a good price. After all, it’s a few years since the shares have quoted in that range. Of course, if only the promoter tenders, their shareholding will go down. But that’s not what I said. Please read my comment properly. It is quite possible for promoter shareholding to go up if they tender some and others tender more. You can do an excel calculation. Again, @HIMSHAH in his latest comment has added some additional context regarding exchange rules that makes his initial observation clearer to me.
Fair enough about speculating, but I see this as a dialogue/exploratory discussion for me to better understand possible outcomes. It’s not like I blamed the company for cheating public shareholders. I am invested myself and have stayed invested because I consider it good value + trust in mgmt.
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True, they have to clear before offer that they want to delist. Then instead of tender it will be reverse book build . They just can’t say after buyback if their holding say increase to even 90 , that they want to delist. Then they will have to offload shares till 75 % again.
Nothing wrong in assumption. We are here to not only make money but safeguard our capital.
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Anyone tracking this. Now market price is close to Buyback price, what happens?
, you can sell shares in market at higher price , or even if promotor. Wish they can increase buyback price.
Buyback update - https://www.bseindia.com/xml-data/corpfiling/AttachLive/00406cbe-371b-4ecb-ba0b-0d6a8bc4c50b.pdf
Promoter group tendering 3.6 crore of the 4.6 crore shares proposed for buyback. Post buyback (assuming all 4.6 crore shares are tendered), promoter holding will go down from 69.41% to 67.55% or so, as per my calculations. Promoter group will get about 270 crores at the buyback price of Rs. 75 per share.
Not sure what newsprint prices are currently, various articles seem to indicate they are staying stubbornly high. I was hoping for a stronger correction which has not played out.
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