Know everything about the buyback from JustDial. Also, we will provide all required information about Just Dial Limited Buyback offer, buyback price, buyback size, Just Dial Buyback record date, and company’s finance so you can make the best decision for your portfolio.
What are Buybacks?
To reduce the number of shares available in the open market, sometimes a company buys its own outstanding shares. It is also known as a share repurchase. Buybacks often inflate the earnings per share and also often increases the value of the stock. It allows companies to invest in themselves. Buybacks often act as a signal that a company’s shares are undervalued.
Example:
When a company’s stock has under-performed than its competitor, despite having a good financial year, the said company might offer a buyback to reward its investors. The company, to provide a return to its investors, might offer them to purchase 10% of the company’s outstanding shares at the current market price.
Reasons for buyback:
- Increase the value of the remaining shares of the organization available by reducing the supply.
- To prevent the other shareholders from taking a controlling stake of the company.
How are buybacks performed:
- The company, which offers a buyback, often presents the shareholders with a tender offer (a type of public takeover bid constituting an offer to purchase some or all of shareholders’ shares in a corporation). They need to submit the offer within a given time adding a premium to the current market price.
- Companies also have the option to buy back the shares in the open market for a long period of time. They can also create repurchase programs that initiate buybacks at a certain time or at a regular interval.
What is JustDial?
A local search engine related services in India which provide various information through their websites, mobile sites, apps, and also over calls (voice, pan India number 88888-88888) and texts (SMS).
Their recently launched JD application has provided a map-based search feature for its users. It also has features like live TV, videos, news, and real-time chat messenger which ensures consumer engagement.
The company makes sure that the user inquiries are answered as fast as possible and also takes in user requests and looks into it.
Highlights:
- They offer services all over India. (250+ cities)
- JustDial provides a wide range of options to its consumers. Some important features are 23 transactions-oriented search plus verticals, JD Social – Justdial’s own social sharing platform, and a Real-Time Chat Messenger, on a single platform.
- They boast a total of 106 million users in the financial year 2018-19 who had provided 83 million ratings and reviews. The company’s user structure also continuing to grow exponentially.
- They also have a presence in the Indian market for a long time. They also have an understanding of the Indian market. With these and they are having a good relation with MSMEs makes this buyback an attractive proposition.
Details:
On the basis of a Board of Directors of the company meeting held on April 30, 2020, JustDial has informed BSE that proposal of buyback of up to 31,42,857 Equity Shares, for an aggregate amount not exceeding Rs. 220 Cr at a price not exceeding Rs. 700 per Equity Share has been approved.
Date: July 3, 2020 (all important dates are provided in the following chart)
Buyback Type: | Tender Offer |
Buyback Record Date: | Jul 03, 2020 |
Buyback Opening Date: | Aug 04, 2020 |
Buyback Closing Date: | Jul 17, 2020 |
Buyback Offer Amount: | ₹ 220 Cr |
Date of Board Meeting approving the proposal: | Apr 30,2020 |
Date of Public Announcement: | Apr 30,2020 |
Buyback Offer Size: | 4.84% |
Buyback Number of Shares: | 31,42,857 |
Price Type: | Tender Offer |
FV: | 10 |
Buyback Price: | ₹ 700 Per Equity Share |
Price: Rs. 700 per equity share (which can be paid by cash) up to a maximum total of Rs.220, 00,00,000
Benefits of the buyback:
- Increase in the shareholder value.
- Getting a better capital structure
- Enhance its returns to shareholders
- Increase of shareholder’s confidence
Financial Details of JustDial:
Particulars | 12 Months period ended March 31 (Audited) |
||
2020 | 2019 | 2018 | |
Total Income | 1,09,282 | 98,446 | 84,763 |
Total Expenses (excluding depreciation) | 68,910 | 66,270 | 61,735 |
Depreciation | 5,207 | 3,365 | 3,642 |
Profit before tax | 35,165 | 28,811 | 19,386 |
Provision for tax (Including Deferred Tax) |
7,934 | 8,131 | 5,068 |
Profit /(Loss) after tax | 27,231 | 20,680 | 14,318 |
Equity Share Capital | 6,491 | 6,476 | 6,739 |
Other Equity | 1,22,256 | 93,387 | 91,181 |
Net worth | 1,28,758 | 99,874 | 97,931 |
Total Debt | – | 420 | – |
(All figures are in Rs. Lakh)
How to participate:
1) To have eligibility, investors should have JustDial shares in demat or physical form as of 3.7.2020
2) If you have shares you can participate in the buyback from 4.8.2020 to 17.8.2020 by selling your shares on BSE or NSE via brokers
3) On the 26th of August, the payments will be given to you for the accepted shares and the unaccepted shares will be returned to you in Demat format.
Pain and impact of share buybacks:
It sends a bad signal to the shareholders if the managers of the company buybacks the shares to increase its short time stock price and raise their bonuses. It is also argued against buybacks that the company and its management are blindly releasing cash and missing valuable investment opportunities. Though, if the management of the company is sensible, then they will first look for alternative allocations of cash for investment opportunities and then use the surplus for a share buyback. Investors should also ask the management of the company to return the excess cash if they cannot find an attractive investment opportunity. To increase its value a firm or an organization must invest in projects that promise them of an equal or higher return. In case of lack of such opportunity then it would be better to give that cash back to investors, so they can individually allocate it to another opportunity.
The opposition of buybacks also argues that buybacks do not have a long term advantage and destroys a company’s long term value. Although the shares are only sold by those investors who lack the conviction that the company’s long term plan would return a profitable value. This leaves behind the “committed” shareholders, who help to focus management’s efforts to create future long-term value.
Some other buybacks of recent times:
Jan 22, 2020 | Aster DM Healthcare Limited – Draft Letter Of Offer |
Jan 20, 2020 | MOIL Limited – Post Buyback Public Announcement |
Jan 20, 2020 | IndiaBulls Ventures Limited |
Jan 14, 2020 | Aster DM Healthcare Limited – Public Announcement |
Jan 10, 2020 | J. B. CHEMICALS & PHARMACEUTICALS LIMITED – POST BUYBACK PA |