NLC India’s board has approved a proposal to buy back 14.19cr shares at Rs88/- per share. This buyback offer amounts to Rs1,248cr and is 9.28% of the the paid-up share capital of the company. The buyback price of Rs. 88 is at an 19% premium to Tuesday’s closing price. The stock price moved up significantly on this buyback announcement.
- 100% Acceptance Ratio
- Live Bidding Status NLCindia Buyback
- NLC India Buyback Issue Date from Nov 13, 2018 to Nov 28, 2018.
- NLC India Entitlment Ratio at ~75% ( See Table)
- NLC India fixes 24/10/18 as RD for Buyback
NLC India Buyback 2018 and 2017
|Announcement of Intent for Buyback||03-10-2018|
|Market price aday before this||66.5|
|Board meeting for Buyback||09-10-2018||31/01/17|
|Buy Back Type||Tender Offer||Tender Offer|
|Buy Back Price||88||99|
|Market Price before Board meeting||73.95||93.65|
|Market Price a day after Board meeting||81.85||96.7|
|% Premium on Market Price||19.00%||5.71%|
|Buy Back Size in Rs. Crore||1249.00||1,476|
|Buy Back Size ( Shares)||141,931,818||149,141,173|
|Equity Capital in crore||1528.568427||1677.7096|
|Tot Number of shares||1,528,568,427||1,677,709,600|
|Face Value of Share in Rs.||10||10|
|Market Price as on RD for buyback||Yet to Happen||96.85|
|Market Price on issue Closing Date||Yet to Happen||107.35|
|Buy Back Issue date||13-11: 28-11-18||6/03: 30/03/17|
|Indicative Mrkt Pr aft return of Shares||106|
|Buyback Shares reserved for Retail||21,289,773||16,585,456|
|No. of Retail Shares on RD Buyback||28,240,287||16,585,456|
|No. retail Shareholders who bid|
|Shares Tendered by retail||1,405,304|
|Tendering ratio||Yet to Happen|
|Retail response||Yet to Happen||8.47%|
|Actual Retail Aceeptance||100%||100%|
NLC India Buyback: A Framework to Estimate Acceptance Ratio:
This framework is based on shareholding of NLC India investors who hold up to 2000 number of shares as on 31/03/2018. 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.
3) Inputs from Retail holding on RD in Buyback -2017
Based on approximations indicated above, and taking a considerably high tendering ratio, NLC India Buyback could have a acceptance ratio in 80-90% band under normal circumstances & can even touch 100% acceptance levels.
Cross Tabulation of Estimated Returns for NLC India 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 estimated Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|Share Buyback Price||88|
|MP when Posted||81.4|
|MP aft Buybk|
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About NLC India Limited (Neyveli Lignite Corporation) :
- Neyveli Lignite Corporation (NLC), incorporated in 1956 is a Schedule “A” Central Public Sector Enterprise, under the administrative control of the Ministry of Coal and has been conferred with “Navratna” status by the Government of India in April 2011.
- The Company is in the Business of Lignite Mining and Power generation. The mining capacity of the Company is 30.6 MTPA out of which 3 Mines are located at Neyveli, Tamilnadu having capacity of 28.5 MTPA and one Mine having capacity of 2.1 MTPA is located at Barsingsar, Rajasthan.
- It is operating four Thermal Power Stations at Neyveli, TamilNadu and one Thermal Power Station at Barsingsar, Rajasthan with a total installed thermal capacity of 3240 MW. Company has set its footprint in generation of renewable energy through its Wind Power Plant (51 MW) at Kazhuneerkulam, Tirunelveli in the State of Tamilnadu and Solar Power Plant (10 MW) at Neyveli.
- Company has also commissioned a coal based thermal Power station of 1000 MW (2 x 500 MW) at Tuticorin, Tamilnadu which has been implemented through its JV company NLC Tamilnadu Power Limited (NTPL) with TANGEDCO having 89% stake in the company.
- Coal India Limited (CIL) and Neyveli Lignite Corporation India Limited (NLCIL) have signed a Memorandum of Understanding (MoU) to form a joint venture (JV) company for solar power generation of 3,000 MW as well as thermal power projects totaling 2,000 MW.
- The size of NLC India Buyback is good which gives hope to good percentage acceptance of shares for retail.
- Retail Holding in the company is small and in 2017 buyback, the retail investors were about 11% of the portion reserved for them in buyback.
- In NLC India 2017 buyback, entitlement ratio was 100% as the price announced by company at that time was not high and stock moved up. Hence it is not comparable.
- Barring large scale buying by arbitrage investors, Buyback % for retail should be high.
- on eve of NLC India buyback , the stock has moved up 10-15% already and hence only moderate returns if any are left on the table.
- I expect NLC India Buyback to proceed at a good speed.
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.