TIPs Industries informed on 10-02-20 that the Board of Directors of the Company at its meeting to be held on Feb 13, 2020 will also consider the proposal for Buy-back of shares. Granules India Buyback as approved by its Board entails a proposal to buyback of up to 13,50,00 equity shares of the Company at a price at Rs.140/- per equity share for an aggregate amount not exceeding Rs. Rs. 18.9 crore. TIPs Industries Buyback represents approximately 9.43% of the total number of equity shares in the paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route.

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TIPs Industries Buyback : Key Info

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TIPs Industries Buyback : Acceptance Ratio Possibilities

This framework is based on estimation of number of TIPs Industries shareholders who hold around 1500 number of shares. To this we have added estimates/approximations 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.

Based on assumptions indicated above and considering a moderate tendering ratio, under normal circumstances TIPs Industries Buyback could have entitlement Ratio of 10-20% . Acceptance ratio could vary depending on price trend exhibited by stock and number of new arbitrage investors.

Return Scenarios: TIPs Industries Buyback

The absolute returns (Profit/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 due to elections. We have depicted some scenarios for Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.

Shares Bought
Buyback Price140
Absolute Returns
Price (Live)113
Investment (Rs.)170100
MP Aft Buybk
Acceptance %110116122

About TIPs Industries

  • TIPS is a leading Company in the Media & Entertainment Industry, engaged in the business of Production and Distribution of films and leveraging its Audio content library digitally in India and overseas.
  • The Company is also a leading producer of Punjabi films in the country.
  • The Company was founded in 1975
  • Mr. Kumar Taurani and Mr. Ramesh Taurani are the co-founders of TIPS

TIPs Industries: Price Trend, Summary of Financials

Financial Overview

Market Cap- Rs. Cr318
CMP in Rs.125
Revenue – cr. (TTM)97.71
Net profit-cr (TTM)11.81
Equity Share Capital25.42
Face Value10
Price / Earning (PE)26.89
Book Value55.92
Price / BV2.23
ROCE %7.67%
ROE  %2.71%
Sales 3 yr CAGR43.74%
Dividend Yield0.80%
Debt / Equity Ratio0.04
52 week  H/L 131.70 / 52.05

Assessment: TIPs industries Buyback

  • The Company operates in two segments i.e. Audio/Video Products and Film Production / Distribution Rights
  • Tips Industries reported quite Positive Financial performance in Dec-19. In Q3FY20 the company reported a profit of Rs 5.02 cr against Rs 1.04 Cr last year. Profit for Nine month is Rs Rs 10 .97 cr against Rs 2.45 Cr for last Whole year. Music saleswas up at Rs 24 cr for Q3 against Rs 13.20 Cr in same quarter.
  • Promoters holding stands at 74.8%.
  • Considering the nature of business carried on by the company whereby revenues do not necessarily accrue evenly over the year,and the he results of a quarter or two may not be representative of the result for the year
  • TIPs industries stock had a good run in last few months on improved performance.
  • TIPs industries stock could find support if similar performance continues.
  • I intend to participate in TIPs industries Buyback only on a price dip with a small to medium exposure.

Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management . Iam also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2). This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/ Buy Back/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.