Freshtrop Fruits Buyback approved by its Board on 23-0819 entails a proposal to buy back of upto 10,00,000 (Ten Lacs only) fully paid up Equity Shares of the Company of Rs.10 each at a price of Rs. 110/-, for an aggregate amount not exceeding Rs. 11,00,00,000 Crores (Rupees Eleven Crores only) . Freshtrop Fruits Buyback represents approximately 8.23% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. .
- Acceptance Ratio 73.24%
- Issue Date 21-11-19 : 4-12-19
- RD 11-10-19
Freshtrop Fruits Buyback : Key Info
|MP after this||94.15|
|MP before BM||97.8|
|Buy Back Price||110|
|% Premium on MP||15.85%|
|MP after BM|
|BuyBack Size Rs. Cr||11|
|BuyBack Size- Shrs||1000000|
|Tot No. shares||12,145,000|
|Equity Capital- cr||12.15|
|FV of Share in Rs.||10|
|Shares - Retail||150,000|
|Buy Back Issue date||21-11:4-12-19|
|Shares on RD||1797473|
Freshtrop Fruits Buyback: Acceptance Ratio Possibilities
This framework is based on estimation of shareholding of Freshtrop shareholders who hold around 2000 number of shares. To this we have added estimates/approximations for
1) Few additional purchase of Shares by existing shareholders with eye on earning additional returns through buyback. This is expected to be low.
2) Purchase of Shares by Arbitrage investors.
Freshtrop Fruits Buyback could result in 8-12% acceptance ratio.
Return Scenarios: Freshtrop Fruits Buyback
The absolute returns (Profit/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 due to elections. 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|
- Buyback RD 11-10-19
About Freshtrop Fruits Ltd
- Freshtrop Fruits Limited is engaged in the business of exporting fresh fruits and vegetables to supermarket chains in India and abroad.
- It exports to various parts of Europe, Russia and Far-east, as well as in domestic market. The Company is engaged in the processing of fruits and vegetables.
- The Company’s segments include Fresh Fruits and Food Processing. The Company is involved in producing fruit pulp and concentrate for both the domestic and international customers.
- The Company offers pomegranate arils. The Company offers grapes, such as Thompson seedless, flame seedless and sharad seedless. It offers processed foods, such as pomegranate, mango pulp, alphonso mango pulp, kesar mango pulp, totapuri mango pulp, guava pulp, tomato paste, amla (gooseberry) pulp, and red papaya concentrate, puree and pulp.
- It has approximately three pack houses and cold storage facilities located in the state of Maharashtra. The Company has a juice processing plant at Nasik, Maharashtra, approximately 180 kilometers from Mumbai.
Freshtrop Fruits. : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||130|
|CMP in Rs.||107.2|
|Equity Share Capital||12.15|
|Price / Earning (PE)||10.76|
|Price / BV||2.19|
|Sales 3 yr CAGR||13.40 %|
|Debt / Equity Ratio||0.44|
|52 week H/L||197.80 / 85.00|
Assessment: Freshtrop Fruits Buyback
- Despite repeated profits, Freshtrop Fruits is not paying out dividend.
- Freshtrop Fruits is not in F&O, so prices post Freshtrop Fruits buyback can be volatile.
- After the announcement of buyback BM, the stock wen up 12% and closed at 107.2 a day before the BM. The investors who bought got trapped as Buyback price and size does not leaves little scope for making gains.
- I do not intend to participate in Freshtrop Fruits Buyback as it is of small size and buyback price together with likely low acceptance ratio leaves little scope for any arbitrage.
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.