MOIL informed on 04-11-19 that the Board of Directors of the Company at its meeting to be held on November 14, 2019 will also consider the proposal for Buy-back of shares. MOIL Buyback as approved by its Board on 14-11-19 entails a proposal to buyback of not exceeding 2,02,81,009 (Two Crore Two Lakh Eighty One Thousand Nine) equity shares at a price of Rs. Rs. 152/- per equity share for an aggregate consideration not exceeding Rs. 3,08,27,13,368.
MOIL Buyback represents approximately 7.87% of the total number of equity shares in the paid-up share capital of the Company 5.17% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. MOIL Buyback amounts to less than 10% of the fully paid-up Equity Share capital and free Reserves and hence shall not need shareholders approval.
MOIL Buyback 2019, 2018 : Key Info
|MP after this||142.5||244.5|
|MP before BM||147.25||234.6|
|Buy Back Price||152||240|
|% Premium on MP||3.23%||2.30%|
|MP after BM||139.5||231.15|
|BuyBack Size Rs. Cr||308.27||210.4|
|BuyBack Size- Shrs||20281009||8766720|
|Tot No. shares||257,608,888||266375608|
|Equity Capital- cr||51.52||53.28|
|FV of Share in Rs.||2||2|
|Shares - Retail||3,042,151||1,315,008|
|MP on RD||224|
|Buy Back Issue date||26-12:08-01-19||07-03:20-03-18|
|Shares on RD||25151948||21570920|
MOIL Buyback : Acceptance Ratio Possibilities
This framework is based on estimation of number of MOIL shareholders who hold around 1500 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.
2) Purchase of Shares by Arbitrage investors.
3) Data from Previous Buybacks
Based on assumptions indicated above and considering a moderate tendering ratio, under normal circumstances MOIL Buyback could have entitlement Ratio of 10-15% . Acceptance ratio cold vary widely as past trends indicate that very few people participated in MOIL buyback. The acceptance ratio in that sense can vary from 30-60%, a figure that will depend to a good extent on new arbitrage investors who buy into the stock and price fluctuation in the stock as an uptrend in stock many times is used by arbitrage investors to exit even before the buyback.
Return Scenarios: MOIL 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. Investors may kept in mind that stock markets are quite volatile at this juncture and there are many political and other uncertainties due to elections. 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.
|MP Aft Buybk|
- MOIL is a Schedule “A” Miniratna Category-I Company. It was originally incorporated as Manganese Ore (India) Limited in the year 1962.
- During the Financial year 2010-11, MOIL got listed and after the listing, the shareholding in the company, of Govt. of India, Govt. of Maharashtra and Govt. of Madhya Pradesh is 71.57%, 4.62% and 3.81% respectively. Rest 20% shares are held by the public.
- At present, MOIL operates 10 mines, six located in the Nagpur and Bhandara districts of Maharashtra and four in the Balaghat district of Madhya Pradesh. The Balaghat Mine is the largest mine of the Company. The mine has now reached a mining depth of about 383 meters from the surface. Dongri Buzurg Mine located in the Bhandara district of Maharashtra is an opencast mine that produces manganese dioxide ore used by dry battery industry. This ore in the form of manganous oxide is used as micro-nutrient for cattle feed and fertilizers.
- MOIL produces and sells different grades of Manganese Ore. They include • High Grade Ores for production of Ferro manganese, • Medium grade ore for production of Silico manganese, Blast furnace grade ore required for production of hot metal and• Dioxide for dry battery cells and chemical industries.
- MOIL has set up a plant based on indigenous technology to manufacture 1,000 MT per annum capacity of Electrolytic Manganese Dioxide (EMD). This product is used for the manufacture of dry battery cells.
- A Ferro manganese plant having a capacity of 10,000 MT per annum was also set up in 1998 by MOIL for value addition. MOIL has also installed 4.8 MW Wind Energy Farm and 15.2 MW Wind Farm
MOIL: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||3,632|
|CMP in Rs.||141|
|Revenue – cr. (TTM)||1,407|
|Net profit-cr (TTM)||451|
|Equity Share Capital||257.61|
|Price / Earning TTM||8.05|
|Price / BV||1.18|
|Sales 3 yr CAGR||31.49%|
|Debt / Equity Ratio||0.00|
|52 week H/L||183.20 / 118.10|
Assessment: MOIL Buyback
- MOIL achieved highest ever turnover in FY19 of Rs14.4 bn (up 9% YoY). However Price of Manganese ore has continued to be under pressure.
- On Nov 1, 2019 MOIL decreased prices of all grades of Manganese Ore and other products in the range of 10-20%.
- Like last quarter (jun-19), MOIL against reported negative financial performance in Sept-19.
- Company is virtually debt free.Stock is providing a dividend yield of 4.07%.
- Company has been maintaining dividend payout of 38.03% .
- Despite poor performance stocks like MOIL could get re-rated if Govt makes strategic disinvestment in some PSUs.
- The stock had run on announcement of MOIL Buyback and with poor Q2FY20 numbers, is likely to be see downward trend on opening.
- There is hardly any arbitrage possibility at current prices and I will enter MOIL if it drifts lower .
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.