FDC Ltd. informed that in its Board meeting on 04-08-20, the Board will also consider Proposal to Buyback the fully paid-up equity shares of the Company. FDC Buyback as pproved by its Board on August 07, 2020 proposes to Buyback upto 21,63,000 fully paid up Equity Shares at a price of Rs. 450/- (Rupees Four Hundred Fifty only) per equity share for an aggregate amount not exceeding Rs. 97,33,50,000 (Rupees Ninety Seven Crore Thirty Three Lakh Fifty Thousand only).
FDC Buyback being less than 10% of the Paid Up Capital and free reserves of company will not required shareholders approval. FDC Buyback represents approximately 1.27% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route. FDC has fixed Aug 21, 2020 as the Record Date for the purpose of determining the names of the shareholders who shall be entitled to tender shares under the Buyback Offer.
See List of all Forthcoming and Recent Buybacks
Updates
- Acceptance: 30.3%
- Issue 16-09:29-09-20
- Entitlement 8.44%
- RD 21-08-20
FDC Buyback : Key Info
Buyback20 | Buyback 19 | |
|---|---|---|
| Type | Tender | |
| MP befo announcement | 320 | 180.4 |
| Announcement | 04-08-20 | 22-05-19 |
| MP after this | 337 | 184 |
| MP befo BM | 335 | 198.95 |
| Board meet | 07-08-20 | 24-05-19 |
| Buy Back Price | 450 | 350 |
| % Premium on MP | 34.33% | 75.92% |
| BuyBack Size- Rs. Cr | 97.335 | 120.05 |
| BuyBack Size- Shares | 2,163,000 | 3,430,000 |
| Tot No.of shares | 170,973,084 | 174,403,084 |
| % Buyback | 1.27% | 1.97% |
| Equity Capital- cr | 17.10 | 17.44 |
| FV of Share in Rs. | 1 | 1 |
| Record Date | 21-08-20 | 07-06-19 |
| Buy Back Issue date | 16-09:29-09-20 | 01-07:12-07-19 |
| Shares reserved- Retail | 324,450 | 514,500 |
| Shares on RD | 3,842,036 | 5584891 |
| Buyback Entitlement | 8.44% | 9.21% |
| Shares Tendered | 1067919 | 2633394 |
| Tendering ratio | 27.80% | 47.15% |
| Retail response | 329.15% | 511.84% |
| Aceeptance % | 30.38% | 19.54% |
FDC Buyback : Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of FDC 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) Data from earlier buyback issues by the company.
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances FDC Buyback could have acceptance ratio of around 15%, a figure that will depend significantly on price movement of the stock in coming days.
Estimated Returns: FDC 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 | 500 | Nos. | |
|---|---|---|---|
| Buyback Price | 450 | ||
| Price (posted) | 323 | ||
| Investment (Rs.) | 161500 | ||
| Absolute Returns % | |||
| MP Aft Buybk | |||
| Acceptance % | 300 | 320 | 335 |
| 12% | -1.55% | 3.90% | 7.99% |
| 17% | 0.77% | 5.91% | 9.77% |
| 22% | 3.10% | 7.93% | 11.55% |
| 27% | 5.42% | 9.94% | 13.33% |
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 FDC Ltd.
- Incorporated in 1940, FDC Ltd. (FDC) is predominately a domestic formulation company and has been slowly moving into exports as well.
- FDC is known for its household OTC brands like Electral (oral rehydration salt), Enerzal (energy drink) besides prescription (Rx) brand of Zifi (anti-infective).
- The company has a presence in various therapeutic groups like oral rehydration salts, ophthalmology, dermatology, anti-infectives, cardiovascular, anti-diabetics and energy drinks.
- FDC is a forerunner in manufacturing and marketing of Oral Rehydration Salts (ORS) and Ophthalmics
- The company markets >300 products in India and exports to over 50 countries. Exports: domestic split is around 25: 75
- . FDC has also set-up globally approved, multi-location manufacturing facilities for Active Pharmaceuticals Ingredients (APIs) as well as Finished Dosage Forms. These facilities are located at Roha, Waluj and Sinnar in Maharashtra, Verna in Goa and Baddi in Himachal Pradesh. FDC markets more than 300 products in India and exports many of these to over 50 countries.
FDC Ltd. : Price Trend, Summary of Financials
Financial Overview
| Market Cap- Rs. Cr | 5,750 |
| CMP in Rs. | 336 |
| Revenue – cr. (TTM) | 1,300 |
| Net profit-cr (TTM) | 285.13 |
| Equity Share Capital | 17.1 |
| Face Value | 1 |
| EPS TTM | 16.67 |
| Price / Earning (PE) | 20.17 |
| Book Value | 90.18 |
| Price / BV | 3.73 |
| ROCE % | 23.37% |
| ROE % | 12.74% |
| Sales 3 yr CAGR | 2.89% |
| Dividend Yield | 0.24% |
| Debt / Equity Ratio | 0.01 |
| 52 week H/L Rs. | 350.00 / 152.50 |
Assessment: FDC Ltd.
- FDC Ltd. reported good Financial performance in Q1FY21 though revenues took a small hit due to Covid-19.
| Rs. in Crores Operating Revenues EBITDA EBITDA % PBT PAT EPS | Ql’ 20–21 308.18 131.55 42.69 121.36 91.72 5.36 | Ql’ 19–20 343.52 88.26 25.69 78.09 56.22 3.22 | YoY Growth -10.29% 49.05% 55.41% 63.14% 66.46% |
- FDC has appericiated quite a bit due to strong sentiment towards phrama stocks.
- FDC overall sales in Indian markets accounted for 75.67% of total consolidated sales for the quarter.
- API Sales in the Export market were Rs. 15.28 crores in Q1FY21, a increase of 36.36 % over Q 1
- FDC is focusing on increasing the Export API sales in the coming year.
- Promoter holding in FDC is about 69%
- FDC has almost zero debt.
- As with earlier buybacks by the company, FDC Buyback is at decent premium to existing market price.
- The issue size is not large, FDC buyback at present price may offer an average to moderate opportunity to arbitrage investors which will legely depend on FDC price post the buyback.
- FDC is not in F&O and so the price after buyback is quite vulnerable to market conditions.
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.