Dear Members,

We have released 7th Aug’20: Special situation opportunity on the proposed de-listing of shares of Xchanging Solutions Ltd (NSE Code – XCHANGING). The same has also been produced below. For details and other updates, please log into the website at the following link –  

Note: For any queries, mail us at [email protected]

Date: 7th Aug’20

CMP – 65.25 (BSE); 65.20 (NSE)

Rating – Positive – 4% weightage; this is not an investment advice (refer rating interpretation)


Xchanging Solutions (NSE – XCHANGING)

Xchanging Solutions Limited, formerly Cambridge Solutions Limited, is an India-based information technology (IT) services provider. The Company has operations in India and an international presence established through subsidiaries in several countries including the USA, Singapore and the UK.

The company offers customers a range of industry-specific solutions like logistic, banking, real estate, government, manufacturing in the United States, United Kingdom, Singapore, Malaysia, Japan, Australia & India.

In its earlier avatar Xchanging Solutions was Cambridge Solutions, however in 2008 UK based Xchanging Plc bought 75% stake in the company for around 690 crores. Xchanging plc is a London-based provider of technology-enabled business processing, especially in the insurance and financial space with a presence in 42 countries. It is known for its Xuber software, a widely used platform in the British insurance market. Its insurance services include processing premiums, policy sales, claims and data analytics.

Recently, in Dec’15 British outsourcing company Xchanging Plc agreed to be bought by Computer Sciences Corp (CSC) for about Rs 4,700 crores after the US technology consulting company topped an offer from Capita Plc.


De-listing offer from the Promoters

Xchanging owns (directly and indirectly) 75% stake in India based Xchanging Solutions.

Xchanging was first acquired by CSC in 2016 and later DXC Technology got created by the merger of CSC with the Enterprise Services business of Hewlett Packard Enterprise (HPE). So, the new company is called DXC Technology and Xchanging is part of the same.

On 5th Aug’20, Xchanging Solutions Ltd informed exchanges about receiving a letter from promoters (DXC Technology India) with a proposal to voluntarily de-list the equity shares of the company from the exchanges.

On 13th Aug’20, the Board of Directors of the company will consider the proposed Delisting Offer after taking into account the due diligence report obtained from the SEBI registered merchant banker.


Important Points with respect to de-listing offer

DXC Technology is the Promoter of Xchanging Solutions and is listed on NASDAQ.

DXCs annual revenue is in the range of 19-20 billion USD (Rs 150,000 crore) and its market cap is around 5 billion USD (Rs 37,500 crore).

In comparison to DXC, Xchanging Solutions current market cap is around Rs 725 crore.

On the operating front, Xchanging Solutions has been performing well with annual PAT of Rs 40-50 crore. It is also debt free with cash and equivalents of Rs 300 crore +.

So, financially the stock is relatively better placed in comparison to several other delisting opportunities initiated in the past.

What is also interesting to note is that back in 2016 CSC came out with a delisting offer for Xchanging Solutions; however, it didn’t accept the discovered price of Rs 109 and therefore the delisting failed.


Rationale behind this opportunity

In the past many de-listing cases, shareholders have tendered shares at 50-200% premium to the floor prices and in some of the cases promoters have accepted such prices.

For the past 5 years Xchanging has mostly been trading in the range of 40-60 odd levels while it has accumulated cash reserves in excess of Rs 300 crore against the current market cap of Rs 725 crore.

The promoters must already be aware of the past failed delisting attempt wherein the discovered price was Rs 109/-, yet they have come up with another offer.

Thus, considering the valuations and the fact that promoters have come up with a second offer in 4 years, we believe there’s a good probability of decent gains from the current levels.

However, here again, we would not like to participate in the reverse book building (RBB) and rather take advantage of appreciation in the stock price (if at all) in the run up to RBB.

We expect the floor price to be around 50 per share which caps the downside at 23%, while we believe that the stock can appreciate to 85-95 odd levels and therefore the risk-reward ratio looks favourable on the opportunity.



We are still some steps away from the reverse book building, if the promoters backtrack on the de-listing proposal or the board does not approve the proposal, there would be a rush to exit from the stock and one may not be able to exit before the stock has corrected by 15-20%.

Secondly, if public shareholders do not approve the de-listing proposal with requisite majority the above-mentioned scenario of 15-20% correction will pan out.

Merchant Banker’s due diligence report is pending and Board of Directors can give their approval to the delisting proposal only if there are no anomalies and the company has been in compliance with the delisting regulations.


Disclosure: I do not have any holding in Xchanging Solutions Ltd.


Best Regards,

Ekansh Mittal
Research Analyst
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: [email protected]


Rating Interpretation

Positive – Expected return of ~15% + on annualized basis in medium to long term for investment recommendations and in short term for Special situations
Neutral – Expected Absolute return in the range of +/- 15%
Negative – Expected Absolute return of over -15%
Coverage closure – No further update on the stock
% weightage – allocation in the subject stock with respect to equity investments

Short term – Less than 1 year
Medium term – Greater than 1 year and less than 3 years
Long term – Greater than 3 years


Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: No

Details of Associates: Not Applicable

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Disclosure (SEBI RA Regulations)

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No

Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No

Whether it or its associates have received any compensation from the subject company in the past twelve months – No

Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No

Whether the research analyst has served as an officer, director or employee of the subject company – No

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