Nucleus Software Exports Limited offers software solutions for the banking and financial services sector. The company recently announced a share buyback plan worth ₹72.35 crore. It has set September 3, 2024, as the record date for this buyback. This buyback represents 1.67% of the company’s total paid-up equity capital and aims to improve financial ratios and enhance shareholder value. In this article, we will discuss the complete details of the buyback and how to apply for it.
Table of Contents
Company Overview
Nucleus Software specializes in providing IT and consultancy services to the banking and financial services sector. The company’s products support operations for more than 200 financial institutions across 50 countries. Their software solutions cover areas like retail lending, corporate banking, cash management, mobile and internet banking, and automotive finance.
Business Overview
The company’s services include Professional Services, Application Services, and Managed Infrastructure Services. Nucleus Software also provides application development and maintenance, along with managed infrastructure solutions. The key products of the company, FinnOne Neo and FinnAxia, are widely used in the financial sector, enhancing the company’s global reach and influence.
Buyback Details
The buyback plan is a strategic move by Nucleus Software to enhance shareholder value by distributing surplus cash. The buyback will also help improve financial ratios like earnings per share (EPS) and return on equity (ROE) by reducing the equity base. Here are the details of the buyback:
| Buyback Size | ₹72.35 crore |
| Number of Shares | 4,48,018 |
| Buyback Price | ₹1,615 per share |
| Percentage of Total Equity | 1.67% |
| Record Date | September 3, 2024 |
| Buyback Method | Tender offer route |
Read the official notification here – OFFICIAL NOTIFICATION
How to Apply for the Nucleus Software Buyback?
Eligible shareholders can participate in the buyback by submitting their shares through the tender offer route.
- The company has reserved up to 15% of the buyback size for small shareholders, which means that smaller investors have a good chance of benefiting from this buyback.
Shareholders can apply through their brokers or directly through online trading platforms that support tender offers.
Recent Financial Performance of the Stock
The company’s financial performance has seen a decline in recent quarters.
| Period | Revenue (₹ crore) | Net Profit (₹ crore) | EBITDA Margin (%) |
|---|---|---|---|
| Q1 FY25 | 195.4 | 30.2 | 14.8 |
| Q4 FY24 | 210 | 53.6 | 27.7 |
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Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | ₹ 3,718.81 Cr. |
| Price to Earnings (P/E) | 22.84 |
| Industry P/E | 39.2 |
| Price to Book Value (P/BV) | 4.95 |
| Industry P/BV | 3.93 |
| Return on Equity (ROE) | 21.66% |
| Return on Capital Employed (ROCE) | 32.0% |
| Return on Assets (ROA) | 16.8% |
| Debt to Equity | 0.01 |
Its Price to Earnings (P/E) ratio is 22.84, which means investors are willing to pay 22.84 times the company’s earnings per share. This is lower than the industry’s average P/E of 39.2, suggesting that the company might be undervalued compared to its peers. The Price to Book Value (P/BV) of 4.95 is higher than the industry’s 3.93, indicating that the stock is priced higher relative to its book value. The company shows strong profitability with a Return on Equity (ROE) of 21.66%, a Return on Capital Employed (ROCE) of 32.0%, and a Return on Assets (ROA) of 16.8%. Lastly, the company’s Debt to Equity ratio is very low at 0.01, showing that it has minimal debt compared to its equity.
Stock Performance
| Time Period | Returns |
|---|---|
| All time | 4,592.57% |
| Past 5 Years | 328.36% |
| Past 1 Year | 38.77% |
| Past 3 months | 10.93% |
Shareholding Pattern
| Shareholder Category | Holding (%) |
|---|---|
| Promoters | 73.27% |
| Foreign Institutional Investors (FII) | 5.35% |
| Domestic Institutional Investors (DII) | 2.10% |
| Public | 25.06% |
Conclusion
The Nucleus Software buyback presents an opportunity for shareholders to either cash out at a premium price or benefit from an increased shareholding percentage post-buyback. With a strategic focus on enhancing shareholder value, this buyback is a key step for the company in optimizing its capital structure.
Disclaimer: This information is for educational purposes only and does not constitute financial advice. Always conduct your own research and consult with financial professionals before making investment decisions.
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