MOSL: BSE (Buy)-Buyback and dividend make for 18% yield
BSE: Buyback and dividend make for 18% yield
(BSE IN, Mkt Cap USD0.5b, CMP INR637, TP INR750, 18% Upside, Buy)
- Admin expenses drag profitability: FY19 operating revenue declined 9% YoY with EBITDA margin crashing to 5.3% (from 23% in FY18), given the operating leverage in the business. PAT before share of profits from CDSL, declined 24% to INR1.65b. 4QFY19 operating revenues (excluding treasury income), was down 19% YoY to INR1.13b (but better than our est. of INR1.05b). However, operating EBITDA came in at -INR5m (lower v/s our est. of INR62m), mainly on account of higher other expenses at INR500m (v/s our est. of INR346m). PAT was 16.6% lower YoY at INR519m, but a 25% beat to our estimate, on account of higher income from other sources (MF platform, income from investment and deposits).
- Buyback and dividend at 18% of market cap: BSE announced a buyback amounting to INR4.6b — ~25% of the company’s unencumbered cash and ~14% of market cap. The buyback is via the tender route, at INR680/share, a ~7% premium to CMP. Also, total dividend for the year is INR30/share, implying post tax payout of ~97% and another 4% of market cap, taking the total yield to 18% at CMP. BSE’s unencumbered cash should come down to ~INR13b from INR18b.
BSE Limited (BSE) is an India-based stock exchange company. BSE provides a transparent market for trading in equity, debt instruments, derivatives and mutual funds. The Company consists of two business segments: Stock Exchange activity and Depository activity. Stock exchange activity is engaged in facilitating trading of securities and the activities incidental there to, and Depository activity provides depository-related services. It also has a platform for trading in equities of small and medium enterprises (SME). BSE also provides various services to capital market participants, including risk management, clearing, settlement, market data services and education. The Company's subsidiaries include Marketplace Technologies Private Limited, Central Depository Services (India) Limited (CDSL), Indian Clearing Corporation Limited (ICCL) and CDSL Ventures Limited. The Company offers the SCORES system, which is a Web based system where investors can lodge their complaints online.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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