Dhanuka agritech buyback

Dhanuka Agritech Limited on 2-11-18 informed that the Board of Directors will consider a proposal for buyback along with the results on 14-11-18. Dhanuka Agritech Buyback as approved by its BOD on 14-11-18, comprises buyback of upto 15,00,000 (Fifteen lakhs) Equity Shares at a buyback price of Rs. 550 per share aggregating to about Rs. 82.5 crore. Dhanuka Buyback represents 3.06% of the paid-up equity share capital of the Company and is on a proportionate basis under  “Tender Offer” route.

See List of all Forthcoming and Recent Buybacks
Dhanuka Agritech Buyback 2018 and 2017
Particulars
Buyback 2018
Buyback 2017
Announcement of Intent for Buyback02-11-18
Market price a day before this (Rs.)364
Board meeting for Buyback14-11-1810-11-16
Buy Back Type Tender Offer Tender Offer
Buy Back Price550850
Market Price before Board meeting41822,864
Market Price a day after Board meeting41022249
% Premium on Market Price31.58%-96.28%
Buy Back Size in Rs. Crore82.580
Buy Back Size ( Shares)1,500,000941,176
Equity Capital in crore9.8210.00
Tot Number of shares49,078,32450,019,500
Face Value of Share in Rs.22
% Buyback3.06%1.88%
Record Date 13-01-17
Market Price as on RD for buyback 23,098
Buy Back Issue dateYet to Happen01-03-17: 15-03-17
Market Price on issue Closing DateYet to Happen22,633
Indicative Mrkt Pr aft return of Shares21,915
Buyback Shares reserved for Retail 225,000141,176
No. retail Shareholders on RD10,300
No. of Retail Shares on RD BuybackYet to Happen812,101
Buyback EntitlementYet to Happen17%
No. retail Shareholders who bidYet to Happen1604
Shares Tendered by RetailYet to Happen247671
Tendering ratioYet to Happen30.50%
Retail responseYet to Happen
Overall Retail AceeptanceYet to Happen57%
Dhanuka Buyback: A Framework to Estimate Acceptance Ratio

This framework is based on estimation of shareholding of Dhanuka Agritech  shareholders  who hold around 450 number of shares. 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  few shares by arbitrage investors. 
3) Inputs from last buyback

Based on approximations indicated above, the entitlement ratio for Dhanuka Agritech Buyback is expected to be low. Dhanuka Agritech buyback could have an acceptance ratio of  10-20%.

Cross Tabulation of Estimated Returns: Dhanuka 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
450
Nos.
Share Buyback Price550
Tabulation of Absolute Returns
A) Based on Share Price at time of Post
Share Purchase Price (Live)426.00Investment191700Rs.
Acceptance Ratio / Price Aft Buyback 385400415430
10%-5.75%-2.58%0.59%3.76%
15%-3.81%-0.82%2.17%5.16%
20%-1.88%0.94%3.76%6.57%
25%0.06%2.70%5.34%7.98%
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
 Buyback of Shares: A Primer for Retail Investors
About Dhanuka Agritech Limited :
  • Dhanuka Agritech Limited is the umbrella company for the business of agro–chemicals, fertilizers, and seeds of Dhanuka Group.
  • It has 4 modern manufacturing facilities at Gurgaon and Sohna in Haryana, Sanand in Gujarat and Udhampur in J&K for formulation of various grades of pesticides, fungicides, miticides, weedicides, plant growth stimulants, plant growth regulators, foliar fertilizers and sticking agents.
  • It also has 2 Seed Processing Units at Mandideep in M.P. and Turkapalli (Hyderabad) in Andhra Pradesh.
  • Dhanuka Agritech Limited has a pan-India presence through its marketing offices in all major states in India, with a network of more than 7,000 distributors/ dealers selling to over 75,000 retailers across India and reaching out to more than 10 million farmers.
  • The Company has technical tie-ups with 4 American, 5 Japanese & 2 European Companies.
Dhanuka Agritech: Summary of Financials,  Stock Price Trend

Parameter

Figures
Market Cap (in Rs.  Cr.)2,045
Earning Per Share (TTM) 25.72
Price To Earnings (P/E) Ratio16.2
Book Value 129.05
Price To BV3.23
EBIT Margin (%)17.22
PAT Margin (%)12.92
ROCE (%)28.79
Debt to Equity Ratio0.01

dhanuka agritech buyback share price

Assessment: Dhanuka Agritech Buyback
  • Dhanuka Agritech  is into specialty & generic chemical biz and management has indicated a revenue growth of 15% going ahead.
  • Dhanuka Agritech posted 4.22 percent jump in net profit at Rs 55.04 crore in the second quarter of 2018-19
  • Its net income rose 10.39 percent to Rs 383.36 crore in the July-September quarter of 2018-19 from Rs 347.26 crore in the year-ago period
  • Dhanuka Agritech is not in  F&O which can lead to volatility in share price post buyback.
  • Inline Q2FY19 results may lend support to share price post buyback.
  • From an arbitrage angle, at present rates and considering below average  acceptance ratio, Dhanuka Buyback may be an average opportunity for  arbitrage investors depending on the entry price, it may offer in coming days. 
  • These are my estimates only and please do your own diligence in this matter as even what may appear as totally safe arbitrage investments in stock markets have inherent risks.

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. Further the data in the post is prone to errors.