KG Denim buyback

KG Denim Board of Directors on 14-11-18 approved a proposal for buyback which comprises buyback of upto 25,00,000 (Twenty Five Lakhs only) Equity Shares at a buyback price of Rs. 40  per share aggregating to about Rs. 10 crore. KG Denim Buyback represents 9.75% 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
KG Denim Buyback 2018 
Particulars
Buyback 2018
Announcement of Intent for Buyback10-11-18
Market price a day before this (Rs.)29
Board meeting for Buyback14-11-18
Buy Back Type Tender Offer
Buy Back Price40
Market Price before Board meeting36
Market Price a day after Board meeting41
% Premium on Market Price10.96%
Buy Back Size in Rs. Crore10
Buy Back Size ( Shares)2,500,000
Equity Capital in crore25.65
Tot Number of shares25,653,905
Face Value of Share in Rs.10
% Buyback9.75%
Record Date30-11-18
Market Price as on RD for buyback
Buy Back Issue dateYet to Happen
Market Price on issue Closing DateYet to Happen
Indicative Mrkt Pr aft return of Shares
Buyback Shares reserved for Retail 375,000
No. retail Shareholders on RD
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
Overall Retail AceeptanceYet to Happen
KG Denim Buyback: A Framework to Estimate Acceptance Ratio

This framework is based on estimation of shareholding of KG Denim buyback  shareholders  who hold around 5000 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. 

Based on approximations indicated above, KG Denim buyback could have an acceptance ratio of  10-25%.

Cross Tabulation of Estimated Returns: KG Denim

This is not being done for this issue as it is small issue and led by better Q2Fy19 performance (dismal results earlier), the stock has already crossed the buyback price.

For more on Buyback Benefits and other issues please refer the earlier Posts
 Buyback of Shares: A Primer for Retail Investors

About KG Denim:
  • KG Denim, is a denim and apparel fabric manufacturer, catering to leading fashion brands and retailers worldwide
  • The Company has two main product segments viz., Fabric (Denim / Apparel) and Home Textiles.
  • The Company has two wholly owned subsidiaries Trigger Apparels Limited and KG Denim (USA) Inc.
  • The Company’s wholly owned subsidiary Trigger Apparels Limited is engaged in the manufacture and marketing of readymade garments.
KG Denim: Summary of Financials,  Stock Price Trend

ParameterFigures
Market Cap (in ₹ Cr.) 103.88 
Earning Per Share (EPS TTM) (₹)2.3
Price To Earnings (P/E) Ratio116.72
Book Value Per Share (₹)42.09
EBIT Margin (%)5.21
PAT Margin (%)0.92
ROCE (%)11.85 %
Debt to Equity (D/E) Ratio1.41

KG Denim Buyback price chart

Assessment: KG Denim Buyback
  • KG denim recorded revenue of Rs.71985 lakh and Net profit of Rs.123 lakh respectively on consolidated basis in FY17-18
  • KG Denim posted good  Q2FY19  results after posting dismal results earlier. 
  • KG Denim is Listed in BSE only.
  • The Company has pledged its shares. 
  • Being a small cap, small buyback and uneven track record, Iam likely to stay away from KG Denim buyback.

ed 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.