Cochin Shipyard Board of Directors at their meeting held on 16/10/18 approved the proposal for buyback of equity shares of the Company. on a proportionate basis through the tender offer. Cochin Shipyard Buyback comprises proposal for purchase by the Company of its own Equity Shares not exceeding 43,95,610 equity shares representing 3.23% of the total outstanding number of equity shares in the paid-up share capital of the Company) at a price of Rs. 455/- per equity share which amounts to Rs. 200,00,02,550 /- (Rupees Two Hundred Crore Two Thousand Five Hundred and Fifty. only) . Record date for Cochin Shipyard Buyback has been fixed at 31, 2018. Cochin Shipyard Limited (CSL), a Schedule B Miniratna PSU under the Ministry of Shipping.
Cochin Shipyard Buyback 2018
|Announcement of Intent for Buyback||11-10-2018|
|Market price a day before this||370|
|Board meeting for Buyback||16-10-18|
|Buy Back Type||Tender Offer|
|Buy Back Price||455|
|Market Price before Board meeting||400|
|Market Price a day after Board meeting|
|% Premium on Market Price||13.75%|
|Buy Back Size in Rs. Crore||200.00|
|Buy Back Size ( Shares)||4,395,610|
|Equity Capital in crore||136|
|Tot Number of shares||135,936,000|
|Face Value of Share in Rs.||10|
|Govt Holding in the company||75%|
|Indiviual Holding in the ciompany||8.32%|
|Market Price as on RD for buyback||Yet to Happen|
|Market Price on issue Closing Date||Yet to Happen|
|Buy Back Issue date||Yet to Happen|
|Indicative Mrkt Pr aft return of Shares|
|Buyback Shares reserved for Retail||659,342|
|No. of Retail Shares on RD Buyback||Yet to Happen|
|Buyback Entitlement||Yet to Happen|
|No. retail Shareholders who bid||Yet to Happen|
|Shares Tendered by retail||Yet to Happen|
|Tendering ratio||Yet to Happen|
|Retail response||Yet to Happen|
|Actual Retail Aceeptance||Yet to Happen|
Cochin Shipyard Buyback: A Framework to Estimate Acceptance Ratio:
This framework is based on shareholding of Cochin Shipyard investors who hold up to 500 number of shares as on 31/03/2018. To this we have added estimates for
1) Few additional purchase of Shares by existing shareholders with eye on earning additional returns through buyback.
2) Purchase of Shares by arbitrage investors.
Based on approximations indicated above, and taking a considerably high tendering ratio, Cochin Shipyard could have a acceptance ratio in 10-20% band under normal circumstances
Cross Tabulation of Estimated Returns for Cochin Shipyard Buyback
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 in mind that stock markets are quite volatile 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.
|Share Buyback Price||455|
|Tabulation of Absolute Returns|
|A) Based on Share Price at time of Post|
|Share Purchase Price taken||399||Investment||175560||Rs.|
|Acceptance Ratio / Price Aft Buyback||360||370||380||390|
National Aluminium Buyback 2018 (NALCO Buyback)
NLC India Buyback 2018
Buyback of Shares: A Primer for Retail Investors
About Cochin Shipyard Limited :
- Cochin Shipyard Ltd. (CSL) incorporated in 1972 is a fully-owned Government of India company. In the last four decades, the company has emerged as a forerunner in the Indian shipbuilding & ship repair industry.
- Cochin Shipyard Limited is the Largest Public Sector Shipyard in India in terms of Dock Capacity.
- Cochin Shipyard Ltd. undertakes shipbuilding and ship repairs for aircraft carriers and other ships. It is building India’s first indigenous aircraft carrier (IAC) and the largest warship.
- Shipbuilding (SB) and ship repair (SR) segment contributed 69% and 31% to the topline, respectively.
- Sector wise Defence sector contributes about 80% to the Revenue with 20% coming from the commercial sector.
- Cochin Shipyard achieved an all turnover of Rs. 2355.12 crores for the year 2017-18 as compared to Rs. 2058.87 crores in the year 2016-17. Cochin Shipyard recorded profit after tax of Rs. 396.75 crores as compared to Rs. 321.55 crores for the previous year.
- For Q1FY19, Revenue increased 18.4% YoY to Rs. 658.7 crore but segment with EBITDA margins of 17.1% and results were overall mixed.
- After the Initial Public Offer of eCochin Shipyard Buyback, the Govt. of India holds 75% in the equity share capital.
- Cochin Shipyard paid a dividend of Rs. 122.34 crores to Government of India for FY17-18.
- The size of Cochin Shipyard Buyback is quite small at Rs. 200 crore which may result in a lower acceptance for retail.
- On eve of Cochin Shipyard Buyback , the stock has moved up from 370-375 levels to current Rs. 400 levels. The stock at this price for this size of issue does not hold much promise from arbitrage angle and may even come under slight pressure.
- Like recent NLACO & NLC India Buybacks, I expect Cochin Shipyard Buyback to proceed at a good speed.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.