Welspun Corp Ltd informed BSE that in its Board meeting on 14-05-19, the Board will also consider Proposal to Buyback the fully paid-up equity shares of the Company of face value of Rs. 5/- each. Welspun Corp Buyback approved by its Board on 15-05-19 comprises purchase by the Company of its own fully paid equity shares at a price to be finalized by the Buyback Committee subject to a maximum price of Rs. 140 (Rupees One Hundred Forty Only) for a maximum aggregate amount up to Rs. 390 crore. Welspun Corp Buyback  represents approximately 10.5% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route.

See List of all Forthcoming and Recent Buybacks

Buyback News

Updates

  • Issue 22-10-19 : 05-11-19
  • Buyback RD 05/07/2019

Welspun Corp Buyback : Key Info

Buyback 19
Type Tender
MP befo announcement140
Announcement 10-05-19
MP after above143
MP befo BM142
Board meet15-05-19
Buy Back Price140
% Premium on MP-1.41%
MP after BM 132
BuyBack Size- Rs. Cr390
BuyBack Size- Shares27,857,143
Tot No.of shares265,226,109
% Buyback10.50%
Equity Capital- cr132.61
FV of Share in Rs.5
Record Date05-07-19
Buy Back Issue date 22-10:05-11-19
Shares reserved- Retail 4,178,571
Shares on RD
Buyback Entitlement
Shares Tendered 10,938
Tendering ratio
Retail response
Aceeptance %100%
Welspun Corp Buyback : Estimate of Acceptance Ratio:

This framework is based on estimation of shareholding of Welspun Corp shareholders  who hold around 1500 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.

Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Welspun Corp Buyback could have acceptance ratio of 30-45%, a figure that will depend significantly on price movement of the stock in coming days.

Estimated Returns: Welspun Corp 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.

Shares Bought
1200
Nos.
Buyback Price140
Absolute Returns
Price (live)138.15
Investment (Rs.)165780
MP Aft Buybk
Acceptance %125130135
30%-6.26%-3.73%-1.19%
40%-5.18%-3.00%-0.83%
50%-4.09%-2.28%-0.47%

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 Welspun Corp

  • Welspun Corp Ltd., the flagship company of Welspun Group.
  • The company is among the Largest Welded Line Pipe manufacturing companies in the world.
  • Welspun Corp Ltd. (WCL) is ranked among the top Large Diameter Pipe Producer.
  • WCL is engaged in in manufacturing and supplying to some of the critical pipelines in the world from its plants in India, Kingdom of Saudi Arabia and USA. 
  • Welspun Corp list of  esteemed clientele includes Chevron, DOW, Elpaso, Enterprise, Exxon Mobil, GAIL, Hunt Oil, Kinder Morgan, PTTEP, Qatar Petroleum, Reliance, Saudi Aramco, Shell, Statoil, TOTAL TransCanada etc.

Welspun Corp : Price Trend, Summary of Financials

Financial Overview

Market Cap- Rs. Cr3,452
CMP in Rs.130.15
Revenue FY18 – cr7542.56
Net profit-cr158.3
Equity Share Capital132.61
Face Value5
EPS5.97
Price / Earning (PE)21.81
Book Value105.48
Price / BV1.23
ROCE %7.46%
ROE  %5.36%
Dividend Yield0.38%
Sales 3 yr CAGR-3.72%
Debt / Equity Ratio0.45
52 week High/Low186.90 / 86.80


Assessment: Welspun Corp Buyback

  • Welspun Corp is well-placed to service demand for LSAW pipes (Longitudinal Submerged Arc Welded Pipes) across geographies. It expects its US ad Saudi ventures to do well.
  • Promoter holding in the company stands at about 48,5% and has been increasing.
  • Company has been reducing debt.
  • Welspun Corp has been maintaining a healthy dividend payout of 22.43%
  • Welspun Corp came out with good Q4FY19 numbers with Total Income from Operations and Operating EBITDA for the continuing pipe business has registered a growth of 116% and 148% respectively on YoY basis.
  • Company is having good order book which is close to all-time highs, provides strong visibility for the future business.
  • The company is having considerable Contingent liabilities of more than 1400 crore.
  • Welspun Corp Buyback price was was below the expectations of investors.
  • With today price jump(20-05-19) there is not much difference between market price and buyback price and is on account of a lower buyback price and relatively good set of Q4FY19 numbers.
  • Considering the size of issue the company is likely to go for a postal ballot to seek share holders approval and hence the total time period may amount to 3-4 months.
  • Welspun Corp is not in F&O which may keep stock under pressure post buyback.
  • It is quite possible that the buyback may become redundant and the share price could hover around the buyback price.

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.