IOCL (INDIAN OIL CORPORATION LTD) on 8-12-18 had informed the exchanges that the meeting of the Board of Directors of the Company is scheduled on 13/12/2018 ,inter alia, to consider and approve the following proposals:(1) Buyback of the fully paid-up equity shares of the Company of face value of Rs.10/- each; (2) Declaration of Interim Dividend on the Equity Shares of the Company for the financial year 2018-19;.
IOCL Buyback as approved by its Board of Directors comprises buyback of equity shares of the Company not exceeding 29,76,51,006 (Twenty Nine Crore Seventy Six Lakhs Fifty One thousand and Six only) equity shares at a price of Rs 149/- ( Rupees One Hundred Forty Nine only) per equity share IOC Buyback (IOCL Buyback) represents approximately 3.06% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route and amounts to Rs. 4435 crore.
The Board of Directors of the Company have declared an Interim Dividend of 67.5% i.e. Rs. 6.75 per equity share of face value of Rs. 10/- each for the financial year 2018-19. The dividend will be credited to the account of the shareholders on or before December 31, 2018 and Company has fixed Tuesday, the 25th December 2018 as the record date for the purpose of ascertaining the eligibility of shareholders for payment of Interim Dividend as well as for Buyback of equity shares.
IOCL Buyback Important Updates:
- IOCL Buyback results in 100% acceptance for Retail
- IOC Buyback. min. Acceptance >82% likely based on Bidding
- IOCL Buyback Live Bid Status
- IOCL BuyBack Date is 22-01-19 to 04-02-19
- IOCL Buyback Entitlement Ratio is 37.3%
IOCL Buyback 2018
Particulars | Buyback 2018 |
|---|---|
| Announcement of Intent for Buyback | 08-12-2018 |
| Market price a day before this | 130 |
| Board meeting for Buyback | 13-12-18 |
| Buy Back Type | Tender Offer |
| Buy Back Price | 149 |
| Dividend Declared in Rs. | |
| Market Price before Board meeting | 137.5 |
| Market Price a day after Board meeting | |
| % Premium on Market Price | 8.36% |
| Buy Back Size in Rs. Crore | 4435 |
| Buy Back Size ( Shares) | 297,651,006 |
| Equity Capital in crore | 9,711.81 |
| Tot Number of shares | 9,711,809,928 |
| Face Value of Share in Rs. | 10 |
| Govt Holding in the company | 54.06 |
| Individual Holding in the company | 3.63 |
| % Buyback | 3.06% |
| Record Date | 25-12-18 |
| Market Price as on RD for buyback | |
| Market Price on issue Closing Date | |
| Buy Back Issue date | 22-01:04-02-19 |
| Buyback Shares reserved for Retail | 44,647,651 |
| No. of Retail Shares on RD Buyback | 119455097 |
| Buyback Entitlement | 37.38% |
| Shares Tendered by retail | 41215921 |
| Tendering ratio | 34.50% |
| Retail response | 92.31% |
| Actual Retail Aceeptance | 100% |
IOCL Buyback: Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of IOCL shareholders who hold around 2000 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. 3) Trends in recent Buybacks esp. of CPSE’s.
Based on approximations indicated above, the entitlement ratio for IOCL is expected to be quite good. Considering an above average tendering ratio, under normal circumstances IOCL could have an acceptance ratio of 70-90% depending on how much new arbitrage investors buy into the stock. Incase of average interest from investors the possibility of acceptance ration touching 100% cannot be ruled out.Estimated Returns for IOCL Buyback ( IOC 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 kept 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 Purchased | 1300 | Nos. | |
|---|---|---|---|
| Share Buyback Price | 149 | ||
| Abs Returns (includes Div) | |||
| mp aft bm | 144 | ||
| Investment (Rs.) | 187200 | ||
| Dividend Income | 8775 | ||
| MP aft Buybk | |||
| Acceptance % | 126 | 128 | 130 |
| 60% | 1.77% | 2.33% | 2.88% |
| 70% | 3.37% | 3.78% | 4.20% |
| 80% | 4.97% | 5.24% | 5.52% |
| 100% | 8.16% | 8.16% | 8.16% |
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 InvestorsAbout IOCL
- IOCL is the largest commercial oil company in the country with extensive refining, distribution & marketing infrastructure and advanced R&D facilities,
- lndianOil’s core business has been refining, transportation and marketing of petroleum products. The Company has over the years expanded its operations across the hydrocarbon value chain – upstream into oil & gas exploration & production and downstream into petrochemicals, besides diversifying into natural gas and alternative energy resources .
- lndianOil carries its business operations abroad through its overseas establishments in Sri Lanka, Mauritius, the UAE, Singapore and USA.
- lndianOil has also been pursuing diverse business interests through joint ventures. During the year, a new joint venture company, viz., Ratnagiri Refinery and Petrochemicals Ltd. (RRPCL), was incorporated with BPCL and HPCL as partners for setting up a mega 60-million metric tonnes per annum (MMTPA) refinery & petrochemicals complex in Ratnagiri district of Maharashtra.
IOCL : Summary of Price Trend and Financials
Snapshot:
| Parameter | Figures |
| Market Cap (in ₹ Cr.) | 132178 |
| EPS (TTM) | 23.87 |
| PE | 132178 |
| BV | 125.82 |
| PE | 5.70 |
| P/B | 1.08 |
| EBIT Margin (%) | 6.98 |
| PAT Margin (%) | 4.13 |
| ROCE (%) | 22.33 |
| Debt to Equity (D/E) Ratio | 0.53 |
| Dividend Yield: | 15.06 % |
IOCL Bonus and Dividend History
| Announced | Bonus | RD | Ex Date |
|---|---|---|---|
| 30-01-2018 | 1:1 | 17-03-2018 | 15-03-2018 |
| 29-08-2016 | 1:1 | 19-10-2016 | 18-10-2016 |
| 13-09-2009 | 1:1 | 30-10-2009 | 29-10-2009 |
| Date | Eff Date | Type | Div(%) | Div(Rs.) |
|---|---|---|---|---|
| 22-05-18 | 20-08-18 | Final | 20.00 | Rs.2.00 |
| 30-01-18 | 08-02-18 | Interim | 190.00 | Rs.19.0 |
| 26-05-17 | 18-08-17 | Final | 10.00 | Rs.1.0 |
| 23-03-17 | 24-03-17 | Interim | 45.00 | Rs.4.5 |
| 31-01-17 | 09-02-17 | Interim | 135.00 | Rs.13.5 |
| 27-05-16 | 02-09-16 | Final | 85.00 | Rs.8.5000 |
- IOCL is likely to benefit from recent softening of crude prices.
-
IOCL’s Q2FY19 results were weak due to poor performance of refinery segment and higher forex loss.
- While IOCL company has delivered a poor growth of -1.05% in the last five years, its profit has grown 33.7% in these years.
- Stock is providing a good dividend yield of above 15%.
- Stock is trading at 1.1 times its book value and PE of less than 6.
- Bonus of 1:1 may reduce the tendering ratio slightly.
- Purely based in Market prices and offered Buyback price, IOCL Buyback could be reasonable and even good from an arbitrage angle due to estimates of a fair acceptance ratio and extra income from dividend. CPSEs in the recent past have been going at a good speed with their Buybacks. Record date of IOC Buyback has already been declared.
- In past few days after announcement of IOCL Buyback plan, the stock has already moved up 5-6% from the prices prevailing at that time.
- These are my estimates only and please do your own diligence in this matter as even what may appear as totally safe arbitrage investments in stock markets have inherent risks.