IT software services provider NIIT Technologies has launched its Rs 337-crore share buyback issue on May 29.
The issue will remain open till June 11, 2020. The company proposed to buy back up to 19,56,290 fully paid equity shares at a price of Rs 1,725 per share.
That means NIIT Technologies has been buying back its shares at a premium of 17 percent to the current price of Rs 1,473. Only such shareholders to participate in the share buyback who already had its shares as on record date - March 12.
"The company's promoter being Hulst BV, an investment holding company registered in the Netherlands, is a part of BPEA (Baring Private Equity Asia). Being an MNC it commands good corporate governance and thereby by returning the excess cash they generate wealth for shareholders at the right time. Thus, this buyback price of Rs 1,725 is fair and justified," Manali Bhatia, Senior Research Analyst at Rudra Shares and Stock Brokers told Moneycontrol.
Hence, she said, "Retail investors (individuals holding up to Rs 2 lakh equity share capital) who already hold shares as on March 12 (record date) may tender their shares in buyback."
She suggested two ways to participate in the buyback - one is hedging through futures. "If a shareholder already has 6 accounts with a minimum of 600 shares then hedging is possible. For example, a retail investor has 100 shares. Estimating the acceptance ratio at 38 percent, the remaining 62 percent shares would be hedged through futures. Thus, such amount needs to be tendered in 6 accounts to match the future lot size of NIIT Tech of 375 shares. Thus, by hedging his shares, an absolute gain of 5-6 percent can be achieved in one month." she explained.
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