Responsive Industries buyback

Responsive Industries Ltd Board of Directors of the Company i held on October 17, 2018, approved its unaudited Financial Results and a proposal to buy-back of equity shares of the Company on a proportionate basis through the tender route. Responsive Industries buyback entails purchase of Equity Shares  not exceeding 2,07,50,000 Equity Shares at a price of Rs. 77 per Equity Share, for an aggregate amount of up to Rs. 159.77 crore. This Responsive Industries buyback represents 7.77% of the total paid-up equity capital of the Company.

Responsive Industries Buyback: Latest Updates

Responsive Industries defers buyback for the time being. To rework the buyback scheme as CMP Rs. 90/- against buyback price Rs. 77 /-.

Responsive Industries Buyback
Particulars
Buyback 2018
Announcement of Intent for Buyback09-10-18
Market price a day before this71.95
Board meeting for Buyback17-10-18
Buy Back Type Tender Offer
Buy Back Price77
Market Price before Board meeting69.95
Market Price after Board meeting72.6
% Premium on Market Price10.08%
Buy Back Size in Rs. Crore159.78
Buy Back Size ( Shares)20,750,000
Equity Capital in crore26.691
Tot Number of shares266,912,700
Face Value of Share in Rs.1
% Buyback7.77%
Record Date30-10-18
Market Price as on RD for buybackYet to Happen
Market Price on issue Closing DateYet to Happen
Buy Back Issue dateYet to Happen
Buyback Shares reserved for Retail 3,112,500
No. of Retail Shares on RD BuybackYet to Happen
Buyback EntitlementYet to Happen
No. retail Shareholders who bidYet to Happen
Shares Tendered by retailYet to Happen
Tendering ratioYet to Happen
Retail responseYet to Happen
Actual Retail AceeptanceYet to Happen
Indicative Mrkt Pr aft return of Shares
Responsive Industries Buyback: A Framework to Estimate Acceptance Ratio:

This framework is based on estimation of shareholding of Responsive Industries investors who hold around 2500 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 a reasonable tendering ratio, Responsive Industries buyback could have a acceptance ratio in 45%-65% band under normal circumstances. Any increase in Responsive Industries share price in intervening period will result in increase of this ratio as the % tendering will go down and vice versa if Responsive Industries price drifts lower.

Cross Tabulation of Estimated Returns for Responsive Industries 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.

Shares Purchased
2500
Nos.
Share Buyback Price77
Tabulation of Absolute Returns
A) Based on Share Price at time of Post
Share Purchase Price taken72Investment180000Rs.
Acceptance Ratio / Price Aft Buyback 64687276
45%-2.99%0.07%3.13%6.18%
50%-2.08%0.69%3.47%6.25%
55%-1.18%1.32%3.82%6.32%
65%0.63%2.57%4.51%6.46%
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
About Responsive Industries :
  • The company was formerly known as Responsive Polymers Limited and changed its name to Responsive Industries Limited in 2007. The company was founded in 1982 and is based in Mumbai, India
  • Responsive Industries Ltd. is a leading global manufacturer of polyvinyl chloride (PVC) based products.
  • The company is among the leading four producers of vinyl flooring internationally and the largest Indian producer of PVC flooring and synthetic leather cloth.
  • Responsive serves multiple industries like healthcare, hospitality, transportation, IT and telecom, retail, education, sports infrastructure and real estate. It has sales to 65 countries and has a wide network of over 300 retailers spread across India
  • Its plan of focusing on high value products seems to have started yielding dividends. 
  • Responsive Industries has retired its ECB Loan and is a Zero debt company now. 
C:\ndownloads\Responsive Industries stock price trend.png


Particulars Sep-18Jun-18Mar-18Dec-17Sep-17Jun-17
Net Sales224.7211.32236.7273.65179.1393.59
Total Expenditure178.44173.41214.39248.91158.51368.1
PBIDT50.7344.3627.6525.1924.9630.81
Interest3.663.63.543.963.755.79
PBDT47.0740.7624.1121.2321.2225.02
Depreciation16.1615.1914.715.2415.2420.49
Tax12.468.75-0.1903.973.09
Deferred Tax0.050.535.771.060.55-1.44
Profit After Tax18.416.293.824.921.452.88
EPS0.690.610.140.180.050.11
Equity26.6926.6926.6926.6926.6926.69
Face Value111111
PBIDT Margin(%)22.5820.9911.689.2113.947.83
PAT Margin(%)8.197.711.611.80.810.73
Assessment:Responsive Industries Buyback
  • Company is changing its product portfolio which has resulted in lower Revenues  in last few quarters but Margins have seen considerable uptick from last two quarters. 
  • Responsive Industries sales rose 25.46% to Rs 224.70 crore and Net profit galloped  to Rs 18.40 crore in the quarter ended September 2018 as against Rs 1.45 crore in same quarter last year.
  • Having already declared the RD with the Board  announcement of Buyback, I expect Responsive Industries Buyback to proceed at a good speed & expect  these good quarterly numbers  to support the share price.
  • The company is being a small cap & not in F&O which could lead to some volatility post buyback. Good results reported by the company may be able to provide some amount of cushion.

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.