Dhanuka Agritech Limited on 18-07-20 informed that the Board of Directors will consider a proposal for buyback along with the results on 22-07-18. Dhanuka Agritech Buyback as approved by its BOD, buy back of 10,00,000 (Ten Lakh) paid-up equity shares of face value Rs. 2 (Rupees Two only) each of the Company not exceeding maximum Buyback price of Rs. 1000/- (Rupees One Thousand only) per Equity Share (“Maximum Buy Back Offer Price”) payable in cash for an aggregate amount not exceeding Rs. 100,00,00,000/- (Rupees One Hundred Crores only). Dhanuka Buyback represents 2.1% of the paid-up equity share capital of the Company and is on a proportionate basis under “Tender Offer” route.
Dhanuka Buyback: Updates
- Acceptance 12.9%
- Issue 20-10-20 : 02-11-20
- Entitlement 5.4%
- RD : 28 sep 2020
Dhanuka Agritech Buyback 2020 and 2019
|Announcement of Intent for Buyback||17-07-20||02-11-18|
|Board meeting for Buyback||22-07-20||14-11-18|
|Buy Back Type||Tender Offer||Tender Offer|
|Buy Back Price||1,000||550|
|Market Price before Board meeting||820||418|
|% Premium on Market Price||21.95%||31.58%|
|Buy Back Size in Rs. Crore||100||82.5|
|Buy Back Size ( Shares)||1,000,000||1,500,000|
|Equity Capital in crore||9.52||9.82|
|Tot Number of shares||47,578,324||49,078,324|
|Face Value of Share in Rs.||2||2|
|Buy Back Issue date||20-10:02-11-20||25-01:07-02-19|
|Buyback Shares reserved for Retail||150,000||225,000|
|No. of Retail Shares on RD Buyback||2,758,370||2,153,294|
|Shares Tendered by Retail||1165848||296606|
|Overall Retail Aceeptance||12.87%||75.86%|
Dhanuka 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. 3) Inputs from last buyback
Based on approximations indicated above, the entitlement ratio for Dhanuka Agritech Buyback is expected to be low. Dhanuka Agritech buyback could have an acceptance ratio of 10-20%.
Cross Tabulation of Estimated Returns: Dhanuka 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.
|Share Buyback Price||1,000|
|Tabulation of Absolute Returns|
|A) Based on Share Price at time of Post|
|Share Purchase Price||770.00||Investment||154000|
|Acceptance Ratio / Price Aft Buyback||750||790||840|
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 Dhanuka Agritech Limited:
- Dhanuka Agritech Limited is the umbrella company for the business of agro–chemicals, fertilizers, and seeds of Dhanuka Group.
- It has 4 modern manufacturing facilities at Gurgaon and Sohna in Haryana, Sanand in Gujarat and Udhampur in J&K for formulation of various grades of pesticides, fungicides, miticides, weedicides, plant growth stimulants, plant growth regulators, foliar fertilizers and sticking agents.
- It also has 2 Seed Processing Units at Mandideep in M.P. and Turkapalli (Hyderabad) in Andhra Pradesh.
- Dhanuka Agritech Limited has a pan-India presence through its marketing offices in all major states in India, with a network of more than 7,000 distributors/ dealers selling to over 75,000 retailers across India and reaching out to more than 10 million farmers.
- The Company has technical tie-ups with 4 American, 5 Japanese & 2 European Companies.
Dhanuka Agritech: Summary of Financials, Stock Price Trend
|Market Cap- Rs. Cr||3,957|
|CMP in Rs.||831|
|Revenue – cr. (TTM)||1,275|
|Net profit-cr (TTM)||178|
|Equity Share Capital||9.52|
|Price / Earning (PE)||22.23|
|Price / BV||5.59|
|Sales 3 yr CAGR||6.67%|
|Debt / Equity Ratio||0.01|
|52 week H/L Rs.||935.70 / 261.00|
Assessment: Dhanuka Agritech Buyback
- Dhanuka Agritech is into specialty & generic chemical biz and company just declated excellent results whohc hhas seen ot stock seek high levels.
- Revenue from operations grew 70.7% led by volume growth of 72.7%in Q1 FY2021
- EBITDA grew 227.0% and higher operating leverage resulted in EBITDA Margin of 17.5% in Q1 FY2021 as against 9.1% in corresponding quarter last year
- PAT grew 250.1% and PAT margin improved to 13.9% in Q1FY2021 as against 6.8% in corresponding quarter last year
- Dhanuka Agritech is not in F&O which can lead to volatility in share price post buyback.
- From an arbitrage angle, at present rates and considering vey moderate acceptance ratio, Dhanuka Buyback may be an average opportunity for arbitrage investors depending on the entry price, it may offer in coming days. I may add the stock on dips.
- Much depends on the stock price movement. Dhanuka delivered superb results in Q1FY21 and if market is convinced that this growth can be maintained , it may reflect +vely on its stock price.
- 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.