Balrampur Chini Buyback approved by its Board on 05-04-19 by its Board comprises proposal of Buyback of not exceeding 1,00,00,000 (One Crore Only) Equity Shares from the equity shareholders/beneficial owners of Equity Shares at a price of INR 180.00 per Equity Share ( for an aggregate maximum amount not exceeding INR 180 Crores only. The Buyback Offer Size represents ~ 7.8 % of the aggregate of the Company’s paid-up capital and free reserves. Balrampur Chini Buyback represents approximately 4,55% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route.
See List of all Forthcoming and Recent Buybacks
Balrampur Chini Updates
- RD 03-07-120
- Balrampur Chini Buyback entitlement : 17 Equity Shares / 227 Equity Shares
- Buyback Issue 20-7: 31-07-20
Balrampur Chini Buyback 2020 & 2019 : Key Info
Particular / Year | Buyback20 | Buyback19 |
|---|---|---|
| Buy Back first intimation | 15-06-20 | 01-04-19 |
| MP a day prior to this | 134 | 139.1 |
| MP a day after this | 134.35 | 139.7 |
| Buy Back BM | 23-06-20 | 05-04-19 |
| Buy Back Type | Tender Offer | Tender Offer |
| Buy Back Price | 180 | 175 |
| MP on BM for Buyback | 134 | 137.75 |
| MP after Buyback BM | 130 | 145.35 |
| % Premium on MP | 34.33% | 27.04% |
| Buy Back Size in Rs. Crore | 180.00 | 147.67 |
| Buy Back Size ( Shares) | 10,000,000 | 8,438,327 |
| Total Shares | 220,000,000 | 228,438,327 |
| % Buyback of Equity | 4.55% | 3.69% |
| Buyback Shrs Retail | 1,500,000 | 1,265,749 |
| Equity Capital in crore | 110.00 | 114.22 |
| Face Value of Share in Rs. | 5 | 5 |
| Record Date | 03-07-20 | 18-04-19 |
| Buy Back Issue date | 20-07:31-07 | 16-05:29-05-19 |
| Shares on RD | 20,026,577 | 15687777 |
| Buyback Entitlement | 7.49% | 8.07% |
| Shares Tendered | 8354374 | 3,266,618 |
| Tendering ratio | 41.72% | 20.82% |
| Retail response | 557% | 258% |
| Aceeptance % | 17.95% | 38.75% |
Balrampur Chini Buyback : Acceptance Ratio Possibilities:
Based on rough estmates of small shareholders and a general assumption on new arbitrage investors, earlier buyback issues by the company & consodering a moderate tendering ratio, Balrampur Chini Buyback could have a quite moderate acceptance ratio ~ 15-30% . Acceptance ratio could vary depending on price trend exhibited by stock, % shares tendered and number of new arbitrage investors.
The absolute returns (Profit/Loss) that may accrue to an Investors/Arbitrage trader are a function of Acceptance Ratio and the Price Post Buyback. THis is impacted by a number of factors which generally cannot be foreseen at the beginning. Normally Buybacks take 3-4 months time and in some cases, they can extend to 5-6 monhs as well. 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 | 1000 | Nos. | |
|---|---|---|---|
| Buyback Price | 180 | ||
| Price (when posted) | 132 | ||
| Investment (Rs.) | 132000 | ||
| Absolute Returns % | |||
| MP Aft Buybk | |||
| Acceptance % | 113 | 120 | 127 |
| 10% | -9.32% | -4.55% | 0.23% |
| 15% | -6.78% | -2.27% | 2.23% |
| 20% | -4.24% | 0.00% | 4.24% |
| 25% | -1.70% | 2.27% | 6.25% |
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 Balrampur Chini Mills
- The Company was incorporated on 14th July, 1975 and is headquartered in Kolkata.
- The Company is engaged in the business of manufacturing of sugar in India. Its allied business consists of manufacturing and marketing of Ethanol, generation and selling of power. Company has 10 sugar factories located in U.P. having an aggregate crushing capacity of 76,500 tons per day.
- The Company’s 10 factories in Uttar Pradesh an has:
• An aggregate cane crushing capacity of 76,500 tonnes per day
• Distilleries possess an aggregate capacity of 360 kilo litres per day
• Saleable co-generation capacity of 163.20 megawatts
Balrampur Chini : Price Trend, Summary of Financials
Financial Overview
| Market Cap- Rs. Cr | 3,327 |
| Revenue FY18 – cr | 4342 |
| CMP in Rs. | 146 |
| Face Value | 1 |
| Price / Earning (PE) | 13.74 |
| Book Value | 76.58 |
| Price / BV | 1.90 |
| ROCE % | 13.28% |
| ROE % | 12.83% |
| Dividend Yield | 1.72% |
| Sales 3 yr CAGR | 12.83% |
| Debt / Equity Ratio | 0.62 |
| 52 week High/Low | 146.20 / 58.80 |
Assessment: Balrampur Chini Buyback
- Balram Chini 2019 buyback led to good gains for investors wheras the 2018 buyback resulted in losses in general for the arbitrage investors.
- The Stock is trading at 1.17 times its book value
- Company has shiwn good consistent profit growth over 5 years period.
- Company has a good return on equity (ROE) track record with 3 Years ROE at respectable 29.10%
- Promoters have pledged 73.06% of their share holding.
- Balrampur Chini apart from sugar manufacturing is also engaged in ancillary businesses of ethanol manufacture and co-generation. The company has been expanding its Distillery capacity.
- The compamy commissioned a new 160 KLD distillery in January 2020
- Balrampur Chini reported
- For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 1740.05 crore, up 45.52 per cent from last quarter sales of Rs 1195.78 crore and up 31.09 per cent from last year’s same quarter sales of Rs 1327.34 crore. The profit howevr were muted.
- As the company does not have the requirement to go for postal ballot and seek share holders approval , RD has already been announced and the the buyback should move at a relatively faster pace.
- Balrampur Chini Mills share in not in F&O which may make it volatile post Buyback.
- Balrampur Chini Mills is a well managed company and has been generally investor friendly in the past.
- The stock has moved up in anticipation of buyback. At these levels I may participate in Balrampur Chini buyback in very moderate qunatities or even skip it. Only attraction is that company is one of the quite efficient company in the sugar industry with optimum distillery & power capacities couplled with good cash flows. The Industry is dependent n Govt regilations and has seen cyclic variations.
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.