Triveni Engineering on 21-05-19 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 03-06-19. Triveni Engineering Buyback approved by its Board comprises proposal for buyback of fully paid up equity shares of the Company having a face value of
1 (Rupee One only) each ('Equity Shares'), not exceeding 1,00,00,000 (One crore) Equity Shares at a price of 100 (Rupees One hundred only) per Equity Share payable in cash for an aggregate amount not exceeding ` 100 crore
The Triveni Engineering Buyback is 3.88% of the paid up equity share capital of the Company as at March 31, 2019) and is on a proportionate basis under “Tender Offer” route. The Buyback Offer Size represents 9.71% and 9.15% of the aggregate of the fully paid-up equity capital and free reserves (including securities premium account) as per the latest audited standalone and consolidated balance sheet of the Company for the financial year ended March 31, 2019, respectively. Record date for Triveni Engineering Buyback is 19-06-2019.
- Entitlement Ratio 10.62%
- Issue 22-07 : 02-08-19
Triveni Engineering Buyback : Key Info
|MP befo announcement||66|
|Buy Back Price||100|
|% Premium on MP||51.52%|
|BuyBack Size- Rs. Cr||100|
|BuyBack Size- Shares||10,000,000|
|Tot No.of shares||257,945,110|
|Equity Capital- cr||25.79|
|FV of Share in Rs.||1|
|MP on RD|
|Buy Back Issue date||22-07:02-08-19|
|Shares reserved- Retail||1,500,000|
|Shares on RD||14,118,154|
|shrholders who tendered|
Triveni Engineering Buyback : Acceptance Ratio Estimate
This framework is based on estimation of shareholding of Triveni Engineering 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 Triveni Engineering Buyback could have acceptance ratio of 15-25%, a figure that will depend significantly on price movement of the stock in coming days.
Estimated Returns: Triveni Engineering Buyback
|Price when posted||72.00|
|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 Triveni Engineering
- Triveni is one of the largest integrated sugar manufacturers in India, with seven sugar mills strategically located across the western, central and eastern parts of the sugarcane rich areas of Uttar Pradesh (U.P.) – India’s largest sugarcane producing state.
- Integrated production concept ensures that almost all the raw material is converted into high quality products.
- Two of our facilities, Khatauli and Sabitgarh, produce refined sugar, which accounts for almost 40% of total sugar production, while the other five units manufacture white sulphitation sugar. The Sabitgarh unit also produces different grades of Pharmaceutical sugar that can be customized as per customer’s requirements.
- Triveni presently operates grid-connected three cogeneration plants, and three incidental co-generation plants located across five sugar units which facilitate the export of surplus power to Uttar Pradesh Power Corporation Limited (UPPCL). We have one of the largest and most efficient single stream molasses-based distillery in the country, located at Muzaffarnagar, which operates on captive feed stock from our sugar units
- Triveni Gears has been delivering customized solutions for industrial gearboxes for the past four decades. It is one of the Largest engineered to-order turbo gearbox manufacturer in India with manufacturing facilities located in Mysuru.
Triveni Engineering: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||1,966|
|CMP in Rs.||76|
|Revenue FY18 – cr||3,371|
|Equity Share Capital||25.79|
|Price / Earning (PE)||16.51|
|Price / BV||1.82|
|Sales 3 yr CAGR||17.82%|
|Debt / Equity Ratio||1.49|
|52 week High/Low||78.50 / 34.05|
Assessment: Triveni Engineering Buyback
- There is overproduction of sugar in the country & the sugar industry is dependent on Government to provide subsidy for port which helps to check the price & prevent a glut situation in the country. The fortunes of industry swing with internal sugar prices, government support & domestic prices.
- There has been continued support to the sugar industry from the Government. The production subsidy has increased to Rs. 13.88/quintal for SY2019 (from Rs. 5.5/quintal for SY2018)
- Triveni Engineering had a good quarter as well as a better FY19 as depicted below
- .Promoter holding in Triveni Engineering is about 68%
- Company is not debt free.
- Triveni Engineering Buyback price is at a good premium to its prevailing market price. Howver the stock has rallied considerably after the announcment for buyback and the also after announcement of buyback price. The stock already moved up from Rs. 67 at the time of announcement by 15% (cmp 76).
- Considering the size of issue the company there is no need for a postal ballot to seek share holders approval and hence the total time period will be lower than normal buybacks.
- Triveni Engineering is not in F&O which may keep stock under pressure post buyback.
- Given the small size of Triveni Engineering Buyback and a sharp run up, I am likely to look into Triveni Engineering buyback on any correction. While Triveni Engineering has performed well, sugar industry is highly cyclical.
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.