National Aluminium Buyback: Snapshot
|BuyBack Size- Shares||130,279,083|
|Buy Back Price||57.5|
|BuyBack Size- Rs. Cr||749.10|
|% Buyback /equity||6.98%|
|MP befo BM||46|
|% Premium on MP||25.00%|
|Shares reserved- Retail||19,541,862|
National Aluminium Buyback: Updates
- RD for Buyback: 08-02-2021
- Issue opens: 25-02:10-03-21
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National Aluminium Buyback: Broad Estimates
Cross Tabulation of Estimated Returns: National Aluminium Buyback
This framework to estimate the % acceptance of shares tendered in the buyback is broadly based on
1) Estimate of number of existing investors with value of holding <= 2 Lacs
2) Estimate of few additional Shares purchased by existing shareholders with eye on earning additional returns through buyback.
3) Purchase of shares by arbitrage investors.
4) Data from earlier Buybacks.
Based on above, the estimates for the Buyback are:
Entitlement ratio : around 8- 12%
Acceptance ratio: around 20-30% ( Any increase in share price prior to close of buyback will increase these ratios and vice versa)
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 ans stock price are affected by a plethora of factors including financial results, changes in internal and external business environment, market sentiment and more so after end of buyback. We have depicted estimated Absolute Returns in table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|Investment (Less Div)||47500|
|Absolute Returns %|
|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
Buyback of Shares: A Primer for Retail Investors
About National Aluminium Company Limited:
- National Aluminium Company Limited (NALCO) is a Navratna CPSE under Ministry of Mines, Govt. of India.
- NALCO is lowest cost producer of Alumina globally, supported by captive bauxite mines at Panchpatmali in Odissa
- The Company is having integrated and diversified operations in mining, metal and power.
- NALCO is one of the largest integrated Bauxite-Alumina-Aluminium- Power Complex in the Country. The Company has a 68.25 lakh TPA Bauxite Mine & 21.00 lakh TPA (normative capacity) Alumina Refinery located at Damanjodi in Koraput district of Odisha, and 4.60 lakh TPA Aluminium Smelter & 1200MW Captive Power Plant located at Angul, Odisha.
- NALCO has bulk shipment facilities at Vizag port for export of Alumina /Aluminium and import of caustic soda and also utilizes the facilities at Kolkata and Paradeep Ports.
- National Aluminium has planned for alumina refinery expansion by 1.0mtpa with announced capex of ~INR64b and expects completion of the project in FY23E.
National Aluminium Buyback: Stock Price Trend:
Assessment: National Aluminium Buyback
- National Aluminium is almost debt free.
- The share is trading at 0.87 times its book value
- National Aluminium has been maintaining a healthy dividend payout.
- Natl. Aluminium reported Positive Financial performance in Sep-20.
- National Aluminium is well placed due to its integrated business model.
- National Aluminium is in F&O which while reduces volatility but also adds ore arbitrage investors.
- Due to lack of other buybacks, National Aluminium Buyback could attract arbitrage investors even as the time available for purchase is less due to approaching RD.
- Attractiveness from Arbitrage Angle: Mild to moderate, I have moderate position in he stock on dips.
- A good Q3FY21 show by National Aluminium can shore up the returns and vice vers
- Time Frame – about 2 months from RD of 8 Feb 2021.
Standard disclaimer: I am not a SEBI registered 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.