Vyapar Industries Buyback

Vyapar Industries had informed on 27-11-18 that a meeting of the Board of Directors of the Company is scheduled to be held on November 30, 2018 to consider and approve buyback of shares. Vyapar Industries Buyback comprises the buyback of upto 15,30,000 (Fifteen Lacs Thirty Thousand Only) Equity Shares of the Company (the ‘Equity Shares’) of the face value of Rs. 10 each at a price of Rs. 50/- per Equity Share aggregating to Rs. 7,65,00,000/- (Rupees Seven crores sixty five lacs only). Vyapar Industries Buyback represents approximately 4.60% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route.

See List of all Forthcoming and Recent Buybacks
Vyapar Industries Buyback 2018 & 2017
This is the third buyback from Vyapar Industries. During the financial year 2015-16, the Company bought back 27,23,000 equity shares at a price of Rs. 30/- aggregating to Rs. 81,69000. The details of Vyapar Industries buyback at present and earlier buyback in 2017 is given in the table below.
Particulars
Buyback 2018
Buyback 2017
Announcement 19-11-18
MP on the day361
Board meet30-11-1817-2-17
Type Tender Tender
Buy Back Price5038
MP befo BM28
MP after BMon 5% circuit
% Premium on Market Price81.82%
Buy Back Size in Rs. Crore7.657.75
Buy Back Size ( Shares)1,530,0002040000
Equity Capital in crore6.138.17
Tot Number of shares6,132,0008172000
Face Value of Share in Rs.1010
% Buyback24.95%24.96%
Record Date 11-4-17
MP as on RD
Buy Back Issue dateYet to Happen16-08: 21-8-17
MP on the dayYet to Happen
Shares reserved- Retail 229,500306,000
Shareholders on RD
Shares on RD Yet to Happen381702
Buyback EntitlementYet to Happen80.17%
No. Shareholders who bidYet to Happen997
Shares Tendered Yet to Happen36577
Tendering ratioYet to Happen9.58%
Retail responseYet to Happen11.95%
AceeptanceYet to Happen100%
Vyapar Industries Buyback: Framework to Estimate Acceptance Ratio:

This framework is based on estimation of shareholding of Vyapar Industries 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) Data from earlier Buyback

Based on approximations indicated above, the entitlement ratio for Monte Carlo Buyback is expected to be low. Considering a high tendering ratio, under normal circumstances Vyapar Industries Buyback could have an acceptance ratio of 30-60% depending on how much new arbitrage investors buy into the stock. The Stock is highly illiquid which makes it a high return high risk play.  

Estimated Returns for Vyapar 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
600
Nos.
Buyback Price55
Absolute Returns
Price 28.00
investment (Rs.)16800
MP Aft Buybk
Acceptance %222426
30%13.93%18.93%23.93%
45%31.61%35.54%39.46%
60%49.29%52.14%55.00%
* Stock is highly Illquid

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 Vyapar Industries
  • The Company was incorporated as “Bhagwan Investments & Trades Limited” in 1983 and the name of the Company was changed to “Vyapar Holdings Limited” in 2002.
  • In 2002, Mr. Hussain Rassai and Mrs. Sakina Rassai, entered in to Memorandum of Understanding (“MOU”) with the Erstwhile Promoters for acquiring 129700 equity shares at a price of Rs. 10/- each representing 54.04% of the then paid upcapital of the Company.
  • Since then Mr. Hussain Rassai and Mrs. Sakina Rassai have consolidated their holding  which included open offers from public shareholders of the Company.
  • Vyapar Industries specializes in Viscose Rayon Filament yarn, embroidery threads, sewing threads and other yarns.
  • Vyapar Industries also has an array of tailoring accessories meant specifically for domestic as well as the export market. Vyapar imports/exports Yarns and other stock & sells the same under its brand name.The company’s core business is to manufacture twisted and dyed viscose rayon filament yarn as well as all other yarns. The technical processes call for twisting, doubling, bleaching, lubricating, dyeing and rewinding of yarns..
Vyapar Industries: Summary of Financials,  Stock Price Trend
Vyapar Industries Buyback

Particulars (Figs in Rs. Cr)

Mar-18Mar-17Mar-16
Operating Income2.161.1920.32
Cost Of Sales2.842.4520.55
Operating Profit-0.68-1.26-0.23
 PBT-0.060.461.29
Tax Charges00.1711.94
PAT-0.070.29-10.65


Assessment: Vyapar Industries Buyback
  • Vyapar Industries share is thinly traded.
  • Vyapar Industries Buyback in 2017 resulted in 100% Buyback
  • In Sept 2018, Vyapar Industries Ltd approved sale of part investment of the Company in the Equity Shares of Beneficent Knowledge Parks & Properties Ltd.to the extent of 6,87,357 Equity Shares for Rs.495 Lacs to Excelestar Ventures 1, LLC, USA.
  • Purely based in Market prices and offered Buyback price, Vyapar Industries Buyback could be exceptionally good from an arbitrage angle, but there is huge certainty as the stock is traded thinly and does not have much history or figures to support it subsequent to buyback.  Thus it can be high rewarding but equally risky.
  • 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.