KG Denim Board of Directors on 14-11-18 approved a proposal for buyback which comprises buyback of upto 25,00,000 (Twenty Five Lakhs only) Equity Shares at a buyback price of Rs. 40 per share aggregating to about Rs. 10 crore. KG Denim Buyback represents 9.75% of the paid-up equity share capital of the Company and is on a proportionate basis under “Tender Offer” route. Further in another Board Meeting]g held on 04-01-19, KG Denim Buy Back offer size was reduced to 21,96,500 fully paid up equity shares of face value of Rs.10/- each at the same price of Rs.40/- per fully paid up equity share in cash aggregating to Rs.8,78,60,000 in place of Rs. 10 Lac earlier.
KG Denim Buyback 2018
|Announcement of Intent for Buyback||10-11-18|
|Market price a day before this (Rs.)||29|
|Board meeting for Buyback||14-11-18|
|Buy Back Type||Tender Offer|
|Buy Back Price||40|
|Market Price before Board meeting||36|
|Market Price a day after Board meeting||41|
|% Premium on Market Price||10.96%|
|Buy Back Size in Rs. Crore||8.79|
|Buy Back Size ( Shares)||2,196,500|
|Equity Capital in crore||25.65|
|Tot Number of shares||25,653,905|
|Face Value of Share in Rs.||10|
|Market Price as on RD for buyback|
|Buy Back Issue date|
|Market Price on issue Closing Date|
|Indicative Mrkt Pr aft return of Shares|
|Buyback Shares reserved for Retail||329,475|
|No. of Retail Shares on RD Buyback||4783921|
|No. retail Shareholders who bid|
|Shares Tendered by Retail|
|Overall Retail Aceeptance||100%|
KG Denim Buyback: A Framework to Estimate Acceptance Ratio
This framework is based on estimation of shareholding of KG Denim buyback shareholders who hold around 5000 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 few shares by arbitrage investors.Based on approximations indicated above, KG Denim buyback could have an acceptance ratio of 10-25%.
Cross Tabulation of Estimated Returns: KG Denim
This is not being done for this issue as it is small issue and led by better Q2Fy19 performance (dismal results earlier), the stock has already crossed the buyback price.For more on Buyback Benefits and other issues please refer the earlier Posts Buyback of Shares: A Primer for Retail Investors
About KG Denim:
- KG Denim, is a denim and apparel fabric manufacturer, catering to leading fashion brands and retailers worldwide
- The Company has two main product segments viz., Fabric (Denim / Apparel) and Home Textiles.
- The Company has two wholly owned subsidiaries Trigger Apparels Limited and KG Denim (USA) Inc.
- The Company’s wholly owned subsidiary Trigger Apparels Limited is engaged in the manufacture and marketing of readymade garments.
KG Denim: Summary of Financials, Stock Price Trend
|Market Cap (in ₹ Cr.)||103.88|
|Earning Per Share (EPS TTM) (₹)||2.3|
|Price To Earnings (P/E) Ratio||116.72|
|Book Value Per Share (₹)||42.09|
|EBIT Margin (%)||5.21|
|PAT Margin (%)||0.92|
|ROCE (%)||11.85 %|
|Debt to Equity (D/E) Ratio||1.41|
Assessment: KG Denim Buyback
- KG denim recorded revenue of Rs.71985 lakh and Net profit of Rs.123 lakh respectively on consolidated basis in FY17-18
- KG Denim posted good Q2FY19 results after posting dismal results earlier.
- KG Denim is Listed in BSE only.
- The Company has pledged its shares.
- Being a small cap, small buyback and uneven track record, Iam likely to stay away from KG Denim buyback.
ed 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.