'Quick Heal buyback looks attractive, expect upside in stock'

Buyback as a percent of equity shares is already high at 9.02 percent, above that, promoter shareholding in the company is also steep at 72.32 percent. Hence, the acceptance ratio could be 55-60 percent.

We advise that traders can buy 800 shares at CMP of Rs 222 in the open market and participate in the tender offer. Also, one has to monitor that shareholders holding value should be less than the amount of Rs 2 lakh as on the record date to qualify for this buyback.

As per SEBI regulations, 15 percent of the offer size will be reserved for retail shareholders (holding amount less than Rs 2 lakh). Therefore, Rs 26.25 crore (15 percent of Rs 175 crore) is set for retail investors.

The estimated acceptance ratio as per calculations turns out to be reasonable at 60 percent, which makes buyback attractive.

We are anticipating upside in Quick Heal as mid & smallcaps stocks have started to gain traction now.

As upside in Quick Heal is possibly quite high, the probability of high alpha is also expected. Hence, if the stock rises even by more than 10 percent, the expected return may turn out from 15 percent-18 percent.

Besides, in adverse case scenario, as there is a big political event lined up for the next month, if the stock moves in the opposite direction up to 20 percent, one may still get expected return to the levels of 5-7 percent.

Downside expectations being low, investors may go for buyback and the remaining quantity (not been accepted in buyback) may be sold in the open market.

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