NTPC Buyback approved in its Board is a proposal to buy back 19,78,91,146 fully paid-up equity shares at a price of Rs 115 per unit for an aggregate consideration not exceeding Rs 2,275.75 crore. The NTPC Buyback Offer Size represents ~2% of the fully paid-up equity share capital of the compnay. The Board has fixed Nov, 13, 2020 as the Record Date for determining the entitlement and the names of the Eligible Shareholders to NTPC Buyback.

See List of all Forthcoming and Recent Buybacks

NTPC Buyback: Updates
  • NTPC Buyback: Issue Dec 7 – Dec 18, 2020,
  • Entitlement 13.9% 91 Equity Shares out of 654.
  • RD 13-11-20
NTPC Buyback 2020 : Info
Buyback
TypeTender
Announcement 26-10-20
MP befo announcement85.85
MP aft announcement89.45
MP befo BM89.2
Board meet02-11-20
Buy Back Price115
% Premium on MP28.92%
BuyBack Size- Rs. Cr2275.75
BuyBack Size- Shares197,891,146
Tot No.of shares9,894,557,280
% Buyback equity2.00%
Equity Capital- cr9,894.56
FV of Share in Rs.10
Record Date13-11-20
Buy Back Issue date07-12:18-12-20
Shares reserved- Retail 29,683,672
Reail shr hlders on RD8,00,541
Retail Shares on RD 213328714
Buyback Entitlement13.91%
Shares Tendered
Tendering ratio
Retail response
Aceeptance %
NTPC Buyback: Broad Estimate of Aceeptance % range

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, the Buyback could have an acceptance ratio of ~ 30-40%.

Cross Tabulation of Estimated Returns: NTPC 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.

Shares Bought
1500
Nos.
Buyback Price115
Price (Live)94.0
Investment (Rs.)141000
Absolute Returns %
MP Aft Buybk
Acceptance %757881
30%-7.45%-5.21%-2.98%
35%-5.32%-3.24%-1.17%
40%-3.19%-1.28%0.64%

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 NTPC:
  • NTPC was set up 1975 to accelerate power development in India.
  • NTPC came out with an IPO in 2004 consisting of 5.25% as fresh issue and 5.25% as offer for sale by the Government of India. Subsequent FPO and OFS have diluted Govt stake to about 51.1%.
  • NTPC became a Maharatna company in May 2010
  • NTPC is India’s largest power utility with an installed capacity of 62,910 MW.
  • It plans to become a 130 GW company by 2032.
  • NTPC is ranked No. 2 Independent Power Producer(IPP) in Platts Top 250 Global Energy Company rankings.
NTPC Buyback: Stock Price Trend

Assessment: NTPC Buyback

  • NTPC is one of the better run CPSEs.
  • Last month, markets regulator Sebi had granted exemption to NTPC from certain buyback norms for the proposed merger of its wholly-owned subsidiaries with the parent company. In October, NTPC had filed an application with Sebi to seek exemption from the strict enforcement of the buyback norms.
  • NTPC commercialized 5.3GW of capacities in FY20 — the highest ever in a single year.
  • NTPC is taking various steps to make its energy portfolio greener by adding significant capacities of Renewable Energy(RE) Sources. By 2032, the company plans to have 32000 MW capacity through RE sources which will amount to nearly 25% of its overall power generation capacity. NTPC has incorporated a subsidiary in 2020 for renewable energy business.
  • NTPC reported Flat Financial performance in Sep-20 qtr.
  • Receivables remain a problem area but could improve with pick up in power demand and money from PFC-REC scheme.
  • NTPC is trading at 0.76 times its book value
  • NTPC has been maintaining a healthy dividend payout of 40.95%.
  • From an arbitrage angle, due to good buyback price, NTPC Buyback presents a moderate opportunity for retail investors even as the final return will depend a lot on stock proice movement prior to RD, issue period, post the buyback and general market scenario after 2 months or so.

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.