FDC Ltd. informed that in its Board meeting on 24-05-19, the Board will also consider Proposal to Buyback the fully paid-up equity shares of the Company. FDC Buyback as approved by ts Board envisages buybacknot exceeding 34,30,000 fully paid up Equity Shares at a price of Rs. 350/- (Rupees Three Hundred Fifty only) per equity share for an aggregate amount not exceeding Rs. 120.05 Crores. FDC Buyback being less than 10% of the Paid Up Capital and free reserves of company will not required shareholders approval. FDC Buyback represents approximately 1.97% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route. FDC has fixed June 07, 2019, Friday, as the Record Date for the purpose of determining the names of the shareholders who shall be entitled to tender shares under the Buyback Offer.
FDC Buyback : Key Info
|MP befo announcement||180.4||228|
|MP after this||184|
|MP befo BM||198.95|
|Buy Back Price||350||350|
|% Premium on MP||75.92%||53.51%|
|MP after BM|
|BuyBack Size- Rs. Cr||120.05||120.05|
|BuyBack Size- Shares||3,430,000||3430000|
|Tot No.of shares||174,403,084||177,833,084|
|Equity Capital- cr||17.44||17.78|
|FV of Share in Rs.||1||1|
|MP on RD||288.2|
|Buy Back Issue date||12-03:23-03-18|
|Shares reserved- Retail||514,500||514,500|
|shrholders on RD||21433|
|Shares on RD||3796128|
|shrholders who tendered||3705|
FDC Buyback : Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of FDC 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.
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances FDC Buyback could have acceptance ratio of 10-20%, a figure that will depend significantly on price movement of the stock in coming days.
Estimated Returns: FDC 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 kep 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.
|Price when posted||200.00|
|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 FDC Ltd.
- Incorporated in 1940, FDC Ltd (FDC) is predominately a domestic formulation company.
- FDC is known for its household OTC brands like Electral (oral rehydration salt), Enerzal (energy drink) besides prescription (Rx) brand of Zifi (anti-infective).
- The company has a presence in various therapeutic groups like oral rehydration salts, ophthalmology, dermatology, anti-infectives, cardiovascular, anti-diabetics and energy drinks.
- FDC is a forerunner in manufacturing and marketing of Oral Rehydration Salts (ORS) and Ophthalmics
- The company markets >300 products in India and exports to over 50 countries. Exports: domestic split is around 85:15.
- . FDC has also set-up globally approved, multi-location manufacturing facilities for Active Pharmaceuticals Ingredients (APIs) as well as Finished Dosage Forms. These facilities are located at Roha, Waluj and Sinnar in Maharashtra, Verna in Goa and Baddi in Himachal Pradesh. FDC markets more than 300 products in India and exports many of these to over 50 countries.
FDC Ltd. : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||3,486|
|CMP in Rs.||198.95|
|Revenue FY18 – cr||1,061|
|Equity Share Capital||17.52|
|Price / Earning (PE)||20.71|
|Price / BV||2.42|
|Sales 3 yr CAGR||6.55%|
|Debt / Equity Ratio||0.45|
|52 week High/Low||269.4 / 148.2|
Assessment: FDC Ltd.
- FDC Ltd. reported Flat Financial performance in the quarter ended Dec-18.
- FDC announce Q4FY19 numbers along with buyback.
- Promoter holding in FDC is about 69%
- FDC has zero debt.
- FDC Buyback is at good premium to existing market price.
- FDC stock which had hit a low of around Rs 150, was ruling around Rs. 160/- two weeks back and had improved to Rs. 175 on general improvement in market sentiments. After announcement of intent to go for buyback, it has moved further up and closed at Rs. 198.5 before announcement of buyback price. The higher than expected buyback price can see some further hardening of stock price on Monday (27-05).
- Even as the issue size is not large, FDC buyback at present price of Rs. 198, may offer a moderate opportunity to arbitrage investors.
- FDC is not in F&O and so the price after buyback is quite vulnerable to market conditions.
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.