techno electric buyback

Techno Electric & Engineering Company on 4-12-18 had informed the exchanges that the meeting of the Board of Directors of the Company is scheduled on 13/12/2018 ,inter alia, to consider and approve buy back of equity shares of the Company. 
Techno Electric Buyback as approved by its Board of Directors on 13th December, 2018  comprises  Buyback of upto 26,82,400 (Twenty Six Lakhs Eighty Two Thousand Four Hundred) equity shares at a price of Rs. 410/- (Rupees Four Hundred Ten Only) per equity share, aggregating to an amount of Rs. 109,97,84,000 (Rupees One Hundred Nine Crores Ninety Seven Lakhs Eighty Four Thousand Only).  Techno Electric  buyback represents approximately 2.38% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route.

See List of all Forthcoming and Recent Buybacks
Techno Electric Buyback 2018 & 2017

The details of Techno Electric buyback at present and earlier buyback in 2017 are given in the table below.

Particulars
Buyback 2018
Buyback 2017
Announcement 04-12-18
MP on the day267
Board meet13-12-1810-2-17
Type Tender Tender
Buy Back Price410400
MP befo BM260
MP after BM233
% Premium on MP57.69%
BuyBack Size- Rs. Cr109.9860
BuyBack Size- Shares2,682,4001500000
Equity Capital- cr22.5422.84
Tot No.of shares112,682,40022,836,480
FV of Share in Rs.210
% Buyback2.38%6.57%
Record Date03-01-193-3-17
MP as on RD 341
Buy Back Issue dateYet to Happen17-03: 31-03-17
MP on the dayYet to Happen
Shares reserved- Retail 402,360225,000
Shareholders on RD
Shares on RD 2422083
Buyback EntitlementYet to Happen9.29%
No. Shareholders who bidYet to Happen
Shares Tendered Yet to Happen560956
Tendering ratioYet to Happen23.16%
Retail responseYet to Happen249.31%
AceeptanceYet to Happen40.11%
Settlement date12-04-17
Techno Electric Buyback: Estimate of Acceptance Ratio:

This framework is based on estimation of shareholding of Techno Electric shareholders  who hold around 1000 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.
3) Data from earlier Buyback

Based on approximations indicated above, the entitlement ratio for echno Electric Buyback is expected to be low. Considering a high tendering ratio, under normal circumstances Techno electric buyback Buyback could have an acceptance ratio of 10-20% depending on how much new arbitrage investors buy into the stock.  This figure may get impacted by recent amalgamation of company and lack of proper information about number of retail shareholders.

Estimated Returns for Techno Electric 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 Purchased
650
Nos.
Buyback Price410
Absolute Returns
Price 260.00
investment (Rs.)169000
MP Aft Buybk
Acceptance %215225235
10%-9.81%-6.35%-2.88%
15%-6.06%-2.79%0.48%
20%-2.31%0.77%3.85%

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 Techno Electric
  • Techno Electric & Engineering Company Limited (TEECL) is a renowned player in India’s power-infrastructure space. Established in 1963, the Company is essentially a service provider, offering Engineering, Procurement and Construction (EPC) services to the three industry segments of generation, transmission
  • TEECL is headquartered in Kolkata, WestBengal, with operations across India and abroad (including Uganda, Afghanistan and Kenya).
  • TEECL forayed into green power generation through the acquisition of the windenergy assets, Simran Wind Project Private Limited (Simran) and Super WindProject Limited, in 2009. 
  • Techno Electric and Engineering company has has carried out a scheme of amalgamation of the company with Simran Wind Projects.
  • IndiGrid  acquired 46% stake in Patran Transmission from Techno Power Grid in Feb 2018 for a consideration of Rs 232 crore.
Techno Electric: Summary of Financials

Price trend for Techno Electric is not being provided as it has  listed back recently after completion of amalgamation. 

Quarterly Results:

Particulars (Figs in Rs. Cr)Q2FY19Q1FY19
Revenues229302
Total Expenses175218
PBT6695
 PAT5467
Equity225225
EPS4.765.89

Assessment: Techno Electric Buyback
  • Established position in the EPC business catering to the power sector.
  • Techno Electric & Engineering reported weak  performance in Sep-18 quarter.
  • For FY 2017-18 PAT grew from Rs. 192.96 crores in FY 2016-17 to` 204.85 crore.
  • The company went for a delisting of shares, amalgamation and subsequent listing of shares.
  • Wind energy generation business is capital-intensive with a modest internal rate of return. 
  • Surprisingly  Techno Electric Stock showed a declining trend after announcement of its intent for buyback.  As the stock has been beaten down a lot, it has been showing some recovery, which may continue a bit after this announcement.
  • Though Techno Electric Buyback is coming at a good price and issue size is better than than that in last buyback, the returns will depend on performance of Techno electric stock (results)  going forward and acceptance ratio in buyback may not be high. Thus the Techno electric buyback offer may not be very attractive based on these assumptions. 
  • These are my estimates only and please do your own diligence in this matter as even what may appear as totally safe arbitrage investments in stock markets have inherent risks.

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.