Cheviot Buyback approved in its Board meeting on 08-09-20 entails a buyback of up to 2,00,000 fully paid-up Ordinary Shares of the Company of face value of Rs. 10 each not, at a price of INR 900 for an aggreagate amount of Rs. 18 crore. Cheviot Buyback represents 3.09% of the present total number of fully paid-up Ordinary Share Capital of the Company, and the buyback is on the Company as on March 31, 2020. The buyback shall be on a proportionate basis throughthe “Tender Offer” route through the stock exchange mechanism. The Board has fixed Sep 18, 2020 as the Record Date for determining the entitlement and the names of the Eligible Shareholders to Cheviot Buyback.

See List of all Forthcoming and Recent Buybacks

Cheviot Buyback: Updates
  • RD 18-sep-20
Cheviot Buyback 2020 : Info
Buyback
2017
TypeTendertender
Announcement 03-09-2019-05-17
MP befo announcement656798.6
MP aft announcement725813.34
MP befo BM740819.34
Board meet08-09-2024-05-17
Buy Back Price9001500
% Premium on MP21.62%83.07%
BuyBack Size- Rs. Cr1830
BuyBack Size- Shares200,000200000
Tot No.of shares6,466,8754511250
% Buyback3.09%
Equity Capital- cr6.474.51
FV of Share in Rs.1010
Record Date18-09-2016-06-17
Buy Back Issue date21-08:04-09-20
Shares reserved- Retail 30,00030,000
Shares on RD 376787
Buyback Entitlement7.96%
Shares Tendered 91,172
Tendering ratio24.20%
Retail response303.91%
Aceeptance %32.90%
Cheviot Buyback: Broad Estimate of Aceeptance % range

1) Few additional purchase  of Shares by existing shareholders with eye on earning additional returns through buyback. 2) Purchase of  few shares by arbitrage investors.

Based on approximations indicated above, the entitlement ratio for Cheviot Buyback is expected to be low if we go by the numbers and could be as low as 10%. Hoever like in last buyback a low tendering ratio may considerably boost the final acceptance ratio.

Cross Tabulation of Estimated Returns:Cheviot 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 Bought
250
Nos.
Buyback Price900
Price (Live)655
Investment (Rs.)163750
Absolute Returns %
MP Aft Buybk
Acceptance %600615630
10%-3.82%-1.76%0.31%
20%0.76%2.60%4.43%
30%5.34%6.95%8.55%

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 Cheviot Cheviot Company Ltd
  •  The company was founded in year 1897.
  • The compnay makes Eco Friendly Jute Fabrics and Bags.
  • Over the years, the Company has excelled in specialisation and upgradation of manufacturing facility and gradually
  • transformed the plant from jute manufacturing unit into a modern textile unit.
  • Now Cheviot Company Limited owns two state-of-the-art jute manufacturing units in South 24 Parganas, West Bengal.
  • Keeping with the pace of consistent growth, the Company continues to build its capacities for manufacturing diversified and customised jute products.
  • Jute has wide variety of uses. No harmful effluents are generated in the process of producing jute products. With digitisation and automation, the Company is hopeful to penetrate in new markets for sale of jute products in coming
Cheviot Buyback: Summary of Financials,  Stock Price Trend

Assessment: Cheviot Buyback

  • Company is virtually debt free.Stock is trading at 0.73 times its book value
  • Company has been maintaining a healthy dividend payout of 22.21%
  • Promoter stake is about 75%.
  • Company having presence in more than 100 years in manufacturing Eco Friendly & BioDegradable products.
  • Revenue from operations grew by 16% in FY 2019-20.
  • Interest burden reduced by 49% in this year
  • Export Sales grew by 15%
  • During the year, Board of directorsdeclared special interim dividend od Rs. 48 per equity share.
  • Cheviot gave a bonus in ratio of 1:2 in 2018
  • The companys earlier buyback was in 2017.
  • Jute textiles are covered under the Essential Commodities Act, 1955 as it is predominantly used for packaging of food grains which are essential commodities. But COVID has led to closure of its plant for many days.
  • From an arbitrage angle, at present rates and considering low acceptance ratio, Cheviot Buyback may be a below average opportunity for  arbitrage investors.  The returns may however be supported if there is low tendering ratio. A goo dip in stock price cpould resent an oppurtunity but thre are not many days left for the RD for buyback.

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.