Bharat Rasayan Buyback: Snapshot

TypeTender
BuyBack Size- Shares93,472
Buy Back Price11,500
BuyBack Size- Rs. Cr107.49
% Buyback /equity2.20%
Board meet12-01-21
MP befo BM10344
% Premium on MP11.18%
Record Dateafter postal ballot
Shares reserved- Retail14,021
Bharat Rasayan Buyback: Updates
  • RD after Postal Ballot

See List of all Buybacks

Bharat Rasayan Buyback 2020 and 2019 : Info
Bharat Rasyan Buyback
TypeTender
BuyBack Size- Shares93,472
Buy Back Price11,500
BuyBack Size- Rs. Cr107.49
% Buyback /equity2.20%
Board meet12-01-21
MP befo BM10344
% Premium on MP11.18%
Record Dateafter postal ballot
Shares reserved- Retail 14,021
Announcement 07-01-21
MP befo announcement9450
MP aft announcement
Tot No.of shares 4,248,740
FV of Share in Rs.10
Equity Capital- cr4.25
Buy Back Issue date
Shares on RD
Buyback Entitlement
Shares Tendered
Tendering ratio
Retail response
Aceeptance %
Bharat Rasayan Buyback: Broad Estimates

Cross Tabulation of Estimated Returns: Bharat RasayanBuyback

This framework to estimate the % acceptance of shares tendered in the buyback is broadly based on
1) Estimate of number of existing investors with value of holding < Rs. 2 Lacs
2) Estimate of few additional Shares purchased by existing shareholders with eye on earning additional returns through buyback.
3) Purchase of shares by arbitrage investors.
Based on above, the estimates for the Buyback are:
Entitlement ratio : around 10- 15%
Acceptance ratio: around 20-25%
( Any increase in share price prior to close of buyback, better quarterly results will increase these ratios and vice versa)

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 ans stock price are affected by a plethora of factors including financial results, changes in internal and external business environment, market sentiment and more so after end of buyback. We have depicted  estimated Absolute Returns in table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.

Shares Bought
15
Nos.
Buyback Price11,500
Price (Live)10036
Investment (Rs.)150540
Absolute Returns %
MP Aft Buybk
Acceptance %930095009700
15%-4.05%-2.35%-0.66%
20%-2.95%-1.36%0.24%
25%-1.85%-0.36%1.14%
30%-0.76%0.64%2.03%

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 Bharat Rasayan :
  • Bharat Rasayan Ltd makes technical grade pesticides, intermediates and bulk formulations.
  • It has has two manufacturing plants in Dahej (Gujarat) and Mokhra (Haryana).
  • Bharat Rasayan Limited is Bharat Group conglomerate‚Äôs flagship company. It was a backward integration project to manufacture Technical Grade Pesticides and Intermediates confirming to International Standards. Within two years, BRL commenced production at its fully equipped plant located in Mokhra village of Rohtak district in Haryana.
  • The Initial Public Issue by BRL in 1993 evinced an overwhelming response.
  • The company became a major stakeholder in the Tata owned Siris Crop Sciences Ltd. and later acquired it.
  • .Besides having the status of Export House, the company has been crowned with two prestigious national awards for outstanding performances in exports, from the FIEO and CHEMEXCIL, set up by the Union Ministry of Commerce and Industry.
  • Bharat Rasayan Limited (BRL) has executed a Joint Venture (“JV”) Agreement in Feb 2020 with Nissan Chemical Corporation (NCC), a Japan, The joint venture will operate through a company named ‘Nissan Bharat Rasayan Private Limited’, a company in which BRL has 30% share and NCC has 70% share.

Bharat Rasayan Buyback: Stock Price Trend:

Assessment: Bharat Rasayan Buyback

  • Company is almost debt free.
  • Bharat Rasayan has delivered good performance over the years
    • CAGR profit 38.20% over last 5 years
    • ROE 33.95% last three years
    • Sales growth of ~ 25% per annum for last decade.
  • Promoters hold 74.8% stake in company
  • Bharat Rasayan is not in F&O which may lead to volatility in price post buyback.
  • good performance of some recent buybacks, Bharat Rasayan Buyback could attract arbitrage investors at the last moment.
  • Attractiveness from Arbitrage Angle: Low at this price. Mild if price goes down.
  • Time Frame – about 3-3.5 months from here on.
  • I may add the stock on dips only and this will depend on my perception of company’s prospects going ahead based on actual or expected quarterly results of the company.

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.