Oil India Buyback

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.

See List of all Forthcoming and Recent Buybacks
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
Particulars
Buyback 2018
Buyback 2017
Announcement of Intent for Buyback12-11-2018
Market price a day before this197
Board meeting for Buyback19-11-1820-3-17
Buy Back Type Tender Offer Tender Offer
Buy Back Price215340
Market Price before Board meeting200.3334.05
Market Price a day after Board meeting
% Premium on Market Price7.34%1.78%
Buy Back Size in Rs. Crore10861527
Buy Back Size ( Shares)50,498,71744912000
Equity Capital in crore1,134.90801.51
Tot Number of shares1,134,903,911801514607
Face Value of Share in Rs.1010
Govt Holding in the company 66.13
Individual Holding in the company5.17
% Buyback4.45%
Record Date03-12-185-4-17
Market Price as on RD for buybackYet to Happen
Market Price on issue Closing DateYet to Happen
Buy Back Issue dateYet to Happen23-5: 05-06-17
Indicative Mrkt Pr aft return of Shares
Buyback Shares reserved for Retail 7,574,8086,736,800
No. of Retail Shares on RD BuybackYet to Happen12,784,098
Buyback EntitlementYet to Happen52.70%
No. retail Shareholders who bidYet to Happen
Shares Tendered by retailYet to Happen1,970,775
Tendering ratioYet to Happen15.42%
Retail responseYet to Happen29.25%
Actual Retail AceeptanceYet to Happen100%
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.

Shares Purchased
900
Nos.
Buyback Price215
Abs Returns
MP when posted201
Investment (Cr.)180900
MP aft Buybk
Acceptance %185190195
50%-0.50%0.75%1.99%
60%1.00%1.99%2.99%
70%2.49%3.23%3.98%
80%3.98%4.48%4.98%
CMP (Live)174

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 :
    Oil Exploration
    Owns & Operates Drilling rigs and Work over
    Production Services– Oil & gas 
    Pipeline for  oil transportation 

 Oil India : Summary of Financials,  Stock Price Trend

Parameter

Figures
Market Cap (in ₹ Cr.)22,777.44
Earning Per Share (EPS TTM) (₹)30.36
Price To Earnings (P/E) Ratio6.61
Book Value Per Share (₹)368.88
Price To Books (P/B) Ratio0.54
EBIT Margin (%)38.71
PAT Margin (%)25.04
ROCE (%)11.01
Debt to Equity (D/E) Ratio0.32

Oil India Buyback Price Chart
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.