KPR Mills has informed the stock exchanges that the meeting of the Board of Directors of the Company is scheduled on 29th April, 2019 at 10.30 A.M. ,inter alia, to consider and approve the results, dividend if any and Buy-back of fully paid-up equity shares of the Company. KPR Mills Buyback as approved by its Board on 30-04-19 entails buyback of not exceeding 37,50,784 (Thirty seven lakh fifty thousand seven hundred and eighty four) equity shares of the company at a price of Rs 702/- per equity share payable in cash for an aggregate consideration not exceeding Rs. 263.31 crore.
KPR Mills Buyback represents approximately 5.17% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. KPR Mills Buyback amounts to 17.61% and l4.87% of the fully paid-up Equity Share capital and free Reserves (including Securities premium Account) as per the latest audited Standalone and consolidated financial Statements respectively.
KPR Mills Buyback 2019, 2018 : Key Info
|MP befo announcement||572.45||405.25|
|MP after above||600|
|MP befo BM||643||694|
|Buy Back Price||702||810|
|% Premium on MP||9.18%||16.71%|
|MP after BM||599||718.2|
|BuyBack Size- Rs. Cr||263.31||108.14|
|BuyBack Size- Shares||3,750,784||1335000|
|Tot No.of shares||72,560,784||73895784|
|Equity Capital- cr||36.28||36.95|
|FV of Share in Rs.||5||5|
|Posatl Ballot end dt||06-06-19|
|Buy Back Issue date||16-03:02-04-18|
|Shares reserved- Retail||562,618||200,250|
|Shares on RD||1,584,597|
KPR Mills Buyback : Acceptance Ratio Possibilities
This framework is based on estimation of number of KPR Mills shareholders who hold around 300 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.
2) Purchase of Shares by Arbitrage investors.
3) Data from Previous Buybacks
Based on assumptions indicated above and considering a moderate tendering ratio, under normal circumstances KPR Mills Buyback could have acceptance ratio of 20-40%, a figure that will depend to a good extent on new arbitrage investors who buy into the stock and price fluctuation in the stock as an uptrend in stock many times is used by arbitrage investors to exit even before the buyback.
Return Scenarios: KPR Mills 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|
About KPR Mills
- KPR Mill is one of the Largest Vertically integrated apparel Manufacturing Companies in India.
- The company produces yarn, Knitted Fabric, Readymade Garments and Wind Power.
- The Company was incorporated as K.P.R. Cotton Mills Private Limited on March19, 2003.
- The Company has eleven state of the art production facilities in the state of Tamil Naduand one in Karnataka.
- The products of the Company are exported to over 30 countries.
- The Company meets its power requirement through its captive green power plant i.e. wind power plant based in Tamil Nadu and co-generation power unit in Karnataka, India which is housed under the subsidiary of the Company i.e. K.P.R. Sugar Mill Limited.
- Recently, it has also started commercial production of garments in Ethiopia.
- In Feb 2019, KPR Mills informed that it is setting up Ethanol plant at its Sugar Factory in Karnataka with a capacity of 90 KLPD. The Proiect cost is Rs.120 Crores. Production is expected to commence from next season.
KPR Mills : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||4,483|
|Revenue FY18 – cr||3024.42|
|CMP in Rs.||617.8|
|Price / Earning (PE)||13.92|
|Price / BV||2.77|
|Sales 3 yr CAGR||5.64%|
|Debt / Equity Ratio||0.26|
|52 week High/Low||739.00 / 511.20|
|Shareholder Category||% Holding|
|Individual with < 2 L nominal shares||5.22%|
Assessment: KPR Mills Buyback
- KPR Mills derives 59 per cent revenue from the domestic market and remaining comes from exports.
- KPR Mills is setting up a ethanol plant at its sugar mill in Karnataka.
This will increase the value addition and reduce the volatility in the sugar business
- Company has been reducing its debt.
- In Q3FY19, the company has posted growth in revenue and net profit of 8.3 per cent and 18.3 per cent, respectively on YoY basis.
- KPR Mills reported flat performance for Q4FY19 on YOY basis with fall in OPM. Consequently the stock went down by 7% on 30-04-19.
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.