Oil India on 12-11-2018,intimated that a meeting of Board of Directors is scheduled on 19-11-18 to consider buyback of equity shares of the Company. Oil India Buyback proposal as approved by its Board of Directors comprises of buyback of equity shares of the Company not exceeding 5,04,98,717 (Five Crore Four Lakhs Ninetiy Eight Thousand Seven Hundred and Seventeen) equity shares at a price of Rs. 215/- per equity share for an aggregate consideration not exceeding Rs. 10,85,72,24,155/- (Rupees One Thousand Eighty Five Crore Seventy Two Lakhs Twenty Four Thousand One Hundred and Fifty Five only). Oil India Buyback represents approximately 4.45% of the total number of equity shares in the paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route. Further December 3, 2018 has been fixed as ‘Record Date’ to determine the entitlement and names of the shareholders who are eligible to participate in the Buyback.
Oil India: Past Buyback, Bonus & Dividends
- Buyback 2017:
- Bonus 1:2 ; ex-bonus from March 27, 2018.
- Dividend FY 17-18, 150%, Rs. 15
Oil India Buyback 2018 and 2017
|Announcement of Intent for Buyback||12-11-2018|
|Market price a day before this||197|
|Board meeting for Buyback||19-11-18||20-3-17|
|Buy Back Type||Tender Offer||Tender Offer|
|Buy Back Price||215||340|
|Market Price before Board meeting||200.3||334.05|
|Market Price a day after Board meeting|
|% Premium on Market Price||7.34%||1.78%|
|Buy Back Size in Rs. Crore||1086||1527|
|Buy Back Size ( Shares)||50,498,717||44912000|
|Equity Capital in crore||1,134.90||801.51|
|Tot Number of shares||1,134,903,911||801514607|
|Face Value of Share in Rs.||10||10|
|Govt Holding in the company||66.13|
|Individual Holding in the company||5.17|
|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||23-5: 05-06-17|
|Indicative Mrkt Pr aft return of Shares|
|Buyback Shares reserved for Retail||7,574,808||6,736,800|
|No. of Retail Shares on RD Buyback||Yet to Happen||12,784,098|
|Buyback Entitlement||Yet to Happen||52.70%|
|No. retail Shareholders who bid||Yet to Happen|
|Shares Tendered by retail||Yet to Happen||1,970,775|
|Tendering ratio||Yet to Happen||15.42%|
|Retail response||Yet to Happen||29.25%|
|Actual Retail Aceeptance||Yet to Happen||100%|
Oil India Buyback: A Framework to Estimate Acceptance Ratio:
This framework is based on estimation of shareholding of Oi India shareholders who hold around 1000 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 Shares by arbitrage investors.
3) Inputs from last buyback
Based on approximations indicated above, the entitlement ratio for Oil India Buyback is expected to be reasonable. Considering a moderate tendering ratio, under normal circumstances Oil India Buyback could have an acceptance ratio of 50-75%.
Cross Tabulation of Estimated Returns for OIL India 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.
|MP when posted||201|
|MP aft Buybk|
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 Oil India Ltd. :
- OIL is a premier Indian National Oil Company engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG.
- OIL also provides various E&P related services and holds 26% equity in Numaligarh Refinery Limited
- Business area of the company are mainly :
Owns & Operates Drilling rigs and Work over
Production Services– Oil & gas
Pipeline for oil transportation
Oil India : Summary of Financials, Stock Price Trend
|Market Cap (in ₹ Cr.)||22,777.44|
|Earning Per Share (EPS TTM) (₹)||30.36|
|Price To Earnings (P/E) Ratio||6.61|
|Book Value Per Share (₹)||368.88|
|Price To Books (P/B) Ratio||0.54|
|EBIT Margin (%)||38.71|
|PAT Margin (%)||25.04|
|Debt to Equity (D/E) Ratio||0.32|
Assessment: Oil India Buyback
- Oil India Q2FY19 numbers that were in-line as revenue in the quarter grew 51.3% yoy to Rs3,743.6cr against Rs2,473.7cr in Q2FY18, EBITDA for the quarter grew 45.7% yoy to Rs1,474.6cr against Rs1,012.2cr last year andnet profit for the quarter grew 33.4% yoy to Rs862cr against Rs 646cr in the corresponding quarter last year.
- The advantage with PSU buybacks like Oil India Buybacks that they are being done at a fast pace than private companies, which leads to better returns for arbitrage investors.
- From an arbitrage angle, at present rates and considering even chances of a reasonable acceptance ratio, Oil India Buyback is an average opportunity for arbitrage investors & may become attractive at any dip. The Buyback price announced falls short of investor expectations and the stock could see side ways movements tomorrow.
- OIl India made a 1:2 bonus issue in March/April 18 and these bonus shares if tendered shall attract higher taxation which may reduce the overall tendering Ratio.
- 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.