James Warren Tea Ltd had informed the Exchanges that the meeting of the Board of Directors of the Company is scheduled on 22/03/2019 ,inter alia, to consider and approve the proposal of buyback of equity shares of Rs.10/- each fully paid, of the Company. James Warren Tea Buyback approved by its Board on 22-03-19 the Board has approved the proposal of Buyback of 23,25,000 (Twenty Three Lakhs Twenty Five Thousand) Equity shares at a price of Rs. 115/- (Rupees One Hundred Fifteen Only) per equity share aggregating to Rs. 26,73,75,000/- (Rupees Twenty Six crores Seventy Three Lakhs Seventy Five Thousand only). James Warren Tea Buyback represents approximately 25% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route.
James Warren Tea Buyback 2019 & 2017 : Key Info
|MP bef this||126.25|
|MP After this||132.55|
|MP befo BM||130|
|Buy Back Price||115||129|
|% Premium on MP||-11.20%|
|BuyBack Size- Rs. Cr||26.74||34.83|
|BuyBack Size- Shares||2,325,000||2,700,000|
|Tot No.of shares||9,300,804||12,000,804|
|Equity Capital- cr||9.30||12.00|
|FV of Share in Rs.||10||10|
|Buy Back Issue date||Yet to Happen||14-02:28-02-19|
|Shares reserved- Retail||348,750||405,000|
|Shareholders on RD||9,246|
|Shares on RD||Yet to Happen||870,241|
|Buyback Entitlement||Yet to Happen||46.54%|
|Shares Tendered||Yet to Happen||220,894|
|Tendering ratio||Yet to Happen||25.38%|
|Retail response||Yet to Happen||54.54%|
|Aceeptance %||Yet to Happen||100.00%|
James Warren Tea Buyback : Acceptance Ratio Possibilities:
This framework is based on estimation of shareholding of James Warren Tea 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.
Data from Previous Buybacks
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances James Warren Tea Buyback could have acceptance ratio of 40-60%, a figure that will depend significantly on new arbitrage investors who buy into the stock.
Return Scenarios: James Warren Tea 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 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|
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 James Warren Tea
- James Warren Tea current business is resultant of de-merger of Tea business of Warren Tea Limited pursuant to the Scheme of Arrangement
- JWTL is engaged in the business of growing, harvesting, manufacturing and selling of tea. Such business is carried on by JWTL through its 7 tea estates situated in diverse locations in the State of Assam
- James Warren Tea has approximately 9,500 employees and are spread over 4,000 hectares of land.
- Its estates have the ability to produce CTC and Orthodox teas.
James Warren Tea: Price Trend, Summary of Financials
|Market Cap in Rs.
|Revenue FY18 in cr||116|
|CMP in Rs.||110|
|Price / Earning (PE)||33.34|
|Price / BV||0.75|
|Sales 3 yr CAGR||-4.78%|
|Debt / Equity Ratio||0|
|52 week High/Low||158.00 / 96.80|
Assessment: James Warren Tea Buyback
- Company is virtually debt free.
- Stock is trading at 0.75 times its book value
- James Warren Tea reported a Flat Financial performance in tje quarter ended Dec-18.
- James warren Tea is a small company.
- James warren Tea price had moved up considerably after announcement of buyback to rather unrealistic levels. Has come down near to buyback levels now.
- Considering the size of issue the company has to go for a postal ballot to seek share holders approval and hence the total time period may amount to 3-4 months.
- Presently James warren is trading close to buyback price or slightly lower which may not be attractive. Though small stocks are vulnerable to significant changes in shareholding which could impact acceptance ratios. Only a downtrend in stock may present a moderate arbitrage opportunity.
Standard disclaimer: 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.