Redington (India) Ltd its board meeting on 17/9/18 has approved buyback of up to 1,11,20,000 shares, aggregating to Rs. 139 crore  via a tender route at ₹ 125 per equity share. This represents 2.78 % of the paid-up equity capital. The Redington buyback price is at a premium of about 11% to its closing price of ₹111.50 on 17/9/18. The stock reacted negatively as  market was expecting a larger issue and a price in region of Rs. 130/-.

Established in 1993, Redington has evolved from  one brand, one product category and one market into a US$ 6.6 billion distribution and supply chain solutions provider to over 200 international brands in IT and Mobility spaces, serving 30 emerging markets.

Redington (India) Limited history of Rewarding Shareholders

Redington  has a good dividend track report and has consistently  declared dividends for the last 5 years.
Bonus:   NIL
Dividend:   120% (Rs. 2.4)- Jun 2018 ; 115%- Jul 2017; 100%- Feb 2017 (special), 105%- Jul 2016, 95%- Jul 2015, 45%- Jul 2014

Redington Buyback: A Framework to Estimate Acceptance Ratio:

This framework is based on shareholding of Redington investors who hold up to certain number of shares as on 31/03/2018. To this we have added estimates for 
1) Additional purchase  of Shares by existing shareholders with eye on earning additional returns through buyback.
2) Purchase of Redington Shares by  new category of arbitrage investors.
Redington stock may go though ups and downs  in the three month period due to stock market movement as well the results that company may declare for Q2FY19. and thus this opportunity has considerable risks. Based on approximations indicated above, an estimated tendering ratio of 65% and considering normal circumstances, Redington Buyback could have a acceptance ratio in 25-35% band

CrossTablualtion Indicating Estimated Returns(Just Possibilities)

The absolute returns/Loss that may accrue to an Investors/Arbitrage trader are a function of Percentage Acceptance Ratio and Price Post Buyback.  Investors may kept on mind that stock markets are ruling at a high and at this  juncture and there are many political and other uncertainties related to international markets. We have  depicted  estimated Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.

Shares Purchased
1600
Nos.
Buyback Price 125INR
Cross Tabulation of % Absolute Returns
A) Based on Share Price at time of Post106.8 Amount170880Rs.
Acceptance Ratio / Price Aft Buyback9098104110
25%-7.54%-1.92%2.29%6.51%
30%-5.90%-0.66%3.28%7.21%
35%-4.26%0.61%4.26%7.91%
40%-2.62%1.87%5.24%8.61%
A) Based on subsequent Share Price101 Amount161600Rs.
Acceptance Ratio / Price Aft Buyback889398103
25%-3.71%0.00%3.71%7.43%
30%-1.88%1.58%5.05%8.51%
35%-0.05%3.17%6.39%9.60%
40%1.78%4.75%7.72%10.69%
This post is purely for informative and educational purpose and is in no way suggestive of taking any position in the counter. Profit or Loss in  any buy sell operation in stocks is associated with significant risk of capital loss. For more on Buyback Benefits and other issues please refer the earlier Posts
  TCS Buyback of Shares 2018
  HCL Technologies Buyack 2018 (HCLTECH Buyback)
 Mphasis Buyback of Shares 2018
  Navneet Buyback 2018
Redington Buyback Offer Details
Particular / Year
Present Buy Back
Buyback Initial Announcement11-09-18
Buy Back Board Meeting date17-09-18
Buy Back Type Tender Offer
Market Price on announcment Day114
Buy Back Price125
% Premium on Market Price9.65%
Buy Back Size in Rs. Crore139.00
Buy Back Size ( Shares)11,120,000
Equity Capital in crore80.03
Face Value of Share in Rs.2
% Buyback2.78%
End date of Voting on Buyback Resolution
Record Date28-09-18
Buy Back Issue date06-11: 22-11-18
Buyback reserved for Retail (Shares)1,668,0000
No. of retail shr holders on RD29,156
Retail Shareholding on RD8903539
Buyback entitlment Ratio18.73%
Actual Shares Tendered Yet to Happen
% Shares Tendered Yet to Happen
Actual Retail Aceeptance Yet to Happen
Redington Price Chart and Quarterly Performance:
pricechart Redington




Rs. In Crore
 Jun-18Mar-18Dec-17Sep-17Jun-17Mar-17
Net Sales3570.553773.454012.813874.113395.994041.27
PBIDT65.6679.9997.41118.8987.43103.45
Interest21.326.5423.7724.7323.8220.28
PBDT44.3653.4573.6494.1663.6183.17
Depreciation3.113.23.543.353.443.21
Tax14.6720.1325.0924.7221.6822.71
Deferred Tax0.12-2.75-0.68-0.31-0.476.31
Reported Profit After Tax26.4632.8745.6966.438.9650.94
EPS 2.653.294.576.643.95.1
Dividend (%)000000
Equity80.0380.0380.0380.0279.9779.97
PBIDTM(%)1.842.122.433.072.572.56
PBDTM(%)1.241.421.842.431.872.06
PATM(%)0.740.871.141.711.151.26
About Redington:
  • Overseas markets contributed  64% of the overall revenue of the company
    during FY 18. 
  • Harrow Investment – the promoter of the Company formerly known as Redington Mauritius Limited (RML), Mauritius  had in 2016  sold  5.13% stake in the company bring their stake down to  8.20%.In Financial Year 2017-18. it further 1.99 crore shares or 4.98% stake in Redington (India),at an average price of Rs125. Among the buyers of the shares are Norges Bank on Account of the Government Pension Fund Global, which bought 1.19 crore shares, and Reliance Mutual Fund, which purchased 70 lakh shares of the firm.
  • Due to this company does not have any promoter group and is professionally managed.
  • In FY17-18, • CRISIL has upgraded the  longterm ratings on the bank facilities of the Company to ‘CRISIL AA /Stable’ from ‘CRISIL AA- / Positive’. The short-term rating and commercial paper have been
    reaffirmed at ‘CRISIL A1+’.

    Some Observations (To be Updated  with progress of Redington Buyback):
  • Reginton now does not have any promoters in the strict sense and the company is professionally managed. 
  • Redington has an investment in Turkey which has been hit hard by sudden devolution of its currency.  Redington has already clarified that it may be impacted to 5-6%,  if the situation stays at this level.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

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