Metroglobal Limited had informed BSE that the meeting of the Board of Directors of the Company is scheduled on 30/03/2019 ,inter alia, to consider the proposal of Buy-back of Equity Shares of the Company. Metroglobal Buyback as approved by the Board comprises Buy-back of up to 40,00,000 (Forty Lakhs) fully paid up Equity Shares of face value of Rs. 10 each at a price of Rs. 56/- per Equity Share for an amount not exceeding Rs. 22.4 crore. Metroglobal Buyback represents approximately 24.5% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. The Board has fixed Friday, April 12, 2019, as the Record Date for the purpose of determining the entitlement and the names of the equity shareholders who are eligible to participate in the Buy-back
Metroglobal Buyback 2019 & 2018 : Key Info
|MP befo announcement||33.5|
|MP after above||40.2|
|MP befo BM||38.9|
|MP after BM|
|Buy Back Price||56|
|% Premium on MP||43.96%|
|BuyBack Size- Rs. Cr||22.4|
|BuyBack Size- Shares||4,000,000|
|Tot No.of shares||16,326,742|
|Equity Capital- cr||16.33|
|FV of Share in Rs.||10|
|Buy Back Issue date|
|MP 1 day befo end dt|
|Shares reserved- Retail||600,000|
|Shareholders on RD|
|Shares on RD||Yet to Happen|
|Buyback Entitlement||Yet to Happen|
|Shares Tendered||Yet to Happen|
|Tendering ratio||Yet to Happen|
|Retail response||Yet to Happen|
|Aceeptance %||Yet to Happen|
Metroglobal Buyback : Acceptance Ratio Possibilities:
This framework is based on estimation of shareholding of Metroglobal ltd. shareholders who hold around 4000 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 of last buyback
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances MetroGlobal Buyback could have acceptance ratio of more than 60% a figure that will also depend to some extent on new arbitrage investors who buy into the stock and the tendering ratio.
Return Scenarios: Metroglobal 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. 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 Metroglobal Ltd.
- The company was formerly known as Global Boards Limited
- The name of the company has been changed to
MetroGlobal Ltd. (Formerly known as Global Boards Limited) w.e.f 02/09/2011, after Amalgamation of Metrochem Industries Limited with Global Boards Limited.
Metroglobal : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||88.67|
|Revenue FY18 – cr||327|
|CMP in Rs.||54.3|
|Price / Earning (PE)||5.56|
|Price / BV||0.27|
|Sales 3 yr CAGR||-4.59 %|
|Debt / Equity Ratio||0.23|
|52 week High/Low||84.00 / 43.70|
Assessment: Metroglobal Buyback
- Company has been making profits buy has not paid any dividend.
- MetroGlobal Buyback Review is trading at 0.27 times its book value.
- The company was formed after amalgamation of Metrochem Industries Limited (MCIL) with Global Boards Limited (GBL) in 2011.
- As the company does not have the requirement to go for postal ballot and seek share holders approval , RD has already been announced and the buyback should move at a relatively faster pace.
- Metroglobal is a small cap which may make it volatile post Buyback.
- The stock has moved up in anticipation of buyback and is hovering around the buyback price. Unless there is some correction, I do not intend to participate in Metroglobal buyback.
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.