Balrampur Chini Buyback approved by its Board on 05-04-19 by its Board comprises proposal of Buyback of fully paid up Equity Shares of face value of Re. 1/- each not exceeding 84,38,327 (Eighty Four Lacs Thirty Eighty Thousand Three Hundred Twenty Seven) Equity Shares at a price of Rs. 175/- (Rupees One Hundred Seventy Five only) per Equity Share for an aggregate amount of ~ Rs. 148 crore. Balrampur Chini Buyback represents approximately 3.69% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route.
Balrampur Chini Buyback 2019 & 2018 : Key Info
|MP befo announcement||139.1||113|
|MP after above||139.7||119.7|
|MP befo BM||137.75||121|
|MP after BM||145.35||116|
|Buy Back Price||175||150|
|% Premium on MP||27.04%||23.97%|
|BuyBack Size- Rs. Cr||147.67||99|
|BuyBack Size- Shares||8,438,327||6,600,000|
|Tot No.of shares||228,438,327||235,028,327|
|Equity Capital- cr||114.22||235.03|
|FV of Share in Rs.||5||10|
|Buy Back Issue date||12-03:23-03-18|
|Shares reserved- Retail||1,265,749||990,000|
|Shares on RD||Yet to Happen||24,363,332|
|Buyback Entitlement||Yet to Happen||4.06%|
|Shares Tendered||Yet to Happen||9,898,972|
|Tendering ratio||Yet to Happen||40.63%|
|Retail response||Yet to Happen||999.90%|
|Aceeptance %||Yet to Happen||10.00%|
Balrampur Chini Buyback : Acceptance Ratio Possibilities:
This framework is based on estimation of shareholding of Balrampur Chini shareholders who hold around 1500 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 Previous Buybacks
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Balrampur Chini Buyback could have acceptance ratio of 10-20%, a figure that will depend to a good extent on new arbitrage investors who buy into the stock.
Return Scenarios: Balrampur Chini 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. We have depicted some scenarios for Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|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.
About Balrampur Chini Mills
- The Company was incorporated on 14th July, 1975 and is headquartered in Kolkata.
- The Company is engaged in the business of manufacturing of sugar in India. Its allied business consists of manufacturing and marketing of Ethanol, generation and selling of power. Company has 10 sugar factories located in U.P. having an aggregate crushing capacity of 76,500 tons per day.
- The Company’s 10 factories in Uttar Pradesh and possess:
• An aggregate cane crushing capacity of 76,500 tonnes per day
• Distilleries possess an aggregate capacity of 360 kilo litres per day
• Saleable co-generation capacity of 163.20 megawatts
Balrampur Chini : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||3,327|
|Revenue FY18 – cr||4342|
|CMP in Rs.||146|
|Price / Earning (PE)||13.74|
|Price / BV||1.90|
|Sales 3 yr CAGR||12.83%|
|Debt / Equity Ratio||0.62|
|52 week High/Low||146.20 / 58.80|
Assessment: Balrampur Chini Buyback
- Company has been reducing debt.
- Balrampur Chini 3 Years ROE stands at quite respectable 25.90%
- Balrampur Chini apart from sugar manufacturing is also engaged in ancillary businesses of ethanol manufacture and co-generation. The company has been expanding its Distillery capacity.
- Balrampur Chini reported stellar numbers in Q3FY19.
- As the company does not have the requirement to go for postal ballot and seek share holders approval , RD has already been announced and the the buyback should move at a relatively faster pace.
- Any warning of lower monsoon may affect Balrampur Chini stock price. On he other hand any +ve news on Government ethanol policy or good results in Q4FY19 can lend support to the stock price.
- Balrampur Chini Mills share in not in F&O which may make it volatile post Buyback.
- Balrampur Chini Mills is a well managed company and has been generally investor friendly in the past.
- The stock has moved up in anticipation of buyback. At these levels I donot intend to participate in Balrampur Chini buyback.
Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management . Iam also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2). This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/ Buy Back/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.