Kaveri Seed Buyback approved by its Board on 24.09.19 entails buyback of fully paid up Equity Shares of face value of Rs.2/- (not exceeding 28,00,000 Equity Shares for an aggregate amount not exceeding Rs. 196 crore (Rupees One Hundred Ninety Six Crores Only), at a price of Rs.700/- (Rupees Seven Hundred only) per Equity Share. Kaveri Seed Buyback represents approximately 4.44% of the total number of equity shares in the 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
Kaveri Seed Buyback : Key Info
2018 | ||
|---|---|---|
| Type | Tender | tender |
| MP initially | 524.95 | 503.5 |
| Announcement | 16-09-19 | 14-05-18 |
| MP after this | 524.95 | |
| MP before BM | 534.2 | |
| Board meet | 24-09-19 | 24-05-18 |
| Buy Back Price | 700 | 695 |
| % Premium on MP | 32.77% | |
| MP after BM | ||
| BuyBack Size Rs. Cr | 196 | 205.93 |
| BuyBack Size- Shrs | 2800000 | 2962962 |
| Tot No. shares | 63,129,133 | 69055095 |
| % Buyback | 4.44% | 4.29% |
| Equity Capital- cr | 12.63 | 13.81 |
| FV of Share in Rs. | 2 | 2 |
| Shares - Retail | 420,000 | 444,444 |
| Record Date | 22-11-19 | 03-08-19 |
| Buy Back Issue date | 30-12:13-01-20 | 27-08:07-09-19 |
| Shares on RD | 2179093 | 2329360 |
| Buyback Entitlement | 19.27% | 19.08% |
| Shares Tendered | 826370 | 637428 |
| Tendering ratio | 37.92% | 27.36% |
| Retail response | 196.75% | 143.42% |
| Aceeptance % | 50.82% | 69.72% |
Kaveri Seed Buyback: Acceptance Ratio Possibilities
This framework is based on estimation of shareholding of Kaveri Seed shareholders who hold around 400 number of shares. To this we have added estimates/approximations for
1) Few additional purchase of Shares by existing shareholders with eye on earning additional returns through buyback. This is expected to be low.
2) Purchase of Shares by Arbitrage investors and inputs from last buyback
Kaveri Seed Buyback could result in 15-25% acceptance ratio.
Return Scenarios: Kaveri Seed Buyback
The absolute returns (Profit/Loss) that may accrue to an Investors/Arbitrage trader are a function of Percentage Acceptance Ratio and Price Post Buyback. 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 | 1700 | Nos. | |
|---|---|---|---|
| Buyback Price | 700 | ||
| Absolute Returns | |||
| Price (Live) | 1422.10 | ||
| Investment (Rs.) | 2417570 | ||
| MP Aft Buybk | |||
| Acceptance % | 440 | 460 | 480 |
| 15% | -66.32% | -65.12% | -63.93% |
| 20% | -65.40% | -64.28% | -63.15% |
| 25% | -64.49% | -63.43% | -62.38% |
| 30% | -63.57% | -62.59% | -61.61% |
About Kaveri Seed Company Ltd
- Kaveri Seed Company Limited is is engaged in the production, processing and marketing of hybrid seeds.
- It owns over 600 acres of farm land. It offers products in two categories: filed crops and vegetables.
- The range of field crops includes corn, paddy, cotton, sunflower, mustard, sorghum, pulses, bajra and wheat.
- The range of vegetables includes tomatoes, okra, chilies, watermelon, gourds and brinjal.
- Kaveri seed has many varities of corn seeds , paddy seeds, cotton seeds , sunflower seeds in, range of mustard seeds etc.
Assessment: Kaveri Seed Buyback
- Kaveri Seed is virtually debt free.
- Promoter’s stake in company has increased
- Promoters hold 55.09% in Kaveri Seeds and they intend to participate in buyback.
- Foreign Investors (including Non esident Indians, FIIS) hold 26% in Kaveri seed.
- After the announcement of buyback BM, the stock went up but has retraced back all gains.
- Cotton segment contributes 59% to top line; EBITDA margins for cotton is around 33%.
- I will look to participate in Kaveri Seed Buyback if it drifts lower from present levels of around Rs. 510/-
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.