Savita Oil Technologies Ltd on 22-0-19 had informed that the Company shall be considering a proposal of Buyback of the fully paid-up equity shares of the Company int its Board Meeting to be held on May 29, 2019. Savita Oil Buyback approved by its Board on 29-05-19 comprises Buyback of up to 2,51,000 fully paid-up equity shares of face value of Rs.10/- each of the Company at a price of Rs. 1,605/- (Rupees One Thousand Six Hundred Five only) per Equity Share for an aggregate amount of up to Rs. 40,28,55,000/- (Rupees Forty Crore Twenty-Eight Lakh Fifty-Five Thousand only)
The Savita Oil Buyback is 4.74% of the fully paid-up equity share capital and free reserves as per the latest audited standalone balance sheet of the Company for the financial year ended March 31, 2019. Savita Oil Buyback represents approximately 1.75% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route. Record date for Savita Oil Buyback is 12-06-2019.
Savita Oil Buyback : Key Info
|MP befo announcement||1062.6||1570.4|
|MP after this|
|MP befo BM||1620|
|Buy Back Price||1,605||1605|
|% Premium on MP||51.04%||2.20%|
|MP after BM||1586.18|
|BuyBack Size- Rs. Cr||40.29||44.94|
|BuyBack Size- Shares||251,000||280000|
|Tot No.of shares||14,322,083||14,602,083|
|Equity Capital- cr||14.32||14.60|
|FV of Share in Rs.||10||10|
|MP on RD||1498.2|
|Buy Back Issue date||01-03:15-03-18|
|Shares reserved- Retail||37,650||42,000|
|shrholders on RD||5828|
|Shares on RD||239812|
Savita Oil Buyback : Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of Savita Oil shareholders who hold around 150 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 from previous buybacks.
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Savita Oil Buyback could have acceptance ratio of 15-30%, a figure that will depend significantly on price movement of the stock in coming days.
Estimated Returns: Savita Oil 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 kep 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.
|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 Savita Oil Technologies Limited
- The Company was incorporated under the Companies Act, 1956 as a private limited company on July 19, 1961 as Stauffer Chemicals Private Limited.
- The Equity Shares of the Company were listed initially on BSE from 1994 and on NSE in 1996.
- The Company has three manufacturing facilities – one is located in Turbhe, Navi Mumbai, Maharashtra and the other two in Silvassa – Union Territory of Dadra & Nagar Haveli at Kharadpada and Silli.
- The Company’s latest plant in Silli, Silvassa is a fully automated state of the art manufacturing unit that started operations in 2013.
- The Company is engaged in manufacturing and marketing of petroleum specialty products including transformer oils, white oils, lubricating oils, industrial oils, greases, etc.
- The Company has also set up a number of windmills ranging in capacities from 350 KW to 1650 KW at different sites in the states of Maharashtra, Karnataka and Tamil Nadu
- The Company not only sells its products in the domestic market, but has been consolidating its position in overseas markets over the years. It launched its lubricating oil brand SAVSOL in the retail domestic market.
- The Company has been supplying its Transformer Oil to most of the electricity boards and big transformer manufacturers, Lubricating Oils to most of the leading 2 wheeler OEs and White Oils to the top FMCG companies and has developed a niche for quality products over the years
Savita Oil Technologies: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||1,859|
|CMP in Rs.||1,298|
|Revenue FY18 – cr||1,782|
|Equity Share Capital||14.32|
|Price / Earning (PE)||14.73|
|Price / BV||2.50|
|Sales 3 yr CAGR||-98.00%|
|Debt / Equity Ratio||0.1|
|52 week High/Low||1314.95 / 873.50|
Assessment: Savita Oil Buyback
- Savita Oil reported moderately good results for Q4FY19 on YOY basis. Sales 557cr ( 463), PBT 51.02 cr (37 cr)
- For FY19 Savita Oil Technolgies reported sales at 2245 cr (1808) Flat Financial perfor, Net profit 114 cr (126 cr) and EPS 79.8 cr.
- Promoter holding in Savita Oil Technologies Limited is about 71.6%
- Company is virtually debt free.
- Savita Oil Buyback price is at a good premium to its prevailing market price and the stock has rallied considerably after the announcment for buyback and the also after announcement of buyback price.
- Considering the size of issue the company thre is no need for a postal ballot to seek share holders approval and hence the total time period will be lower than normal buybacks.
- Savita Oil Technologies Limited is not in F&O which may keep stock under pressure post buyback.
- Given the small size of Savita Oil Buyback and a sharp runup I am likely to abstain from the this buyback. Otherwise Savita Oil Technologies Limited is a good company to hold.
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.