ONGC had informed on 14-12-18 that the meeting of the Board of Directors of the Company is scheduled on 20/12/2018,inter alia, to consider and approve to consider the proposal for buyback of the fully paid-up equity shares of the Company. ONGC Buyback as approved by its Board of Directors on 20th December, 2018 Buyback of equity shares of the Company not exceeding 25,29,55,974 equity shares of the Company at the price of Rs. 159 (Rupees one hundred and fifty-nine only)per equity share payable in cash for an aggregate consideration not exceeding Rs. 4022 Crore (Rupees four thousand and twenty-two crore only). ONGC buyback represents approximately 1.97% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route.
See List of all Forthcoming and Recent Buybacks
Latest Updates:
- ONGC tendering ratio was ~21% only which resulted in 100% Acceptance ratio in Retail option of Buyback
- Seems ONGC Buyback has resulted in 100% buyback for retail
- ONGC Buyback Live Bidding on NSE
- ONGC Buyback Opens 29-1-19 to 11-02-19
- ONGC Entitlement Ratio is 26.55%
- Record date for share buyback fixed at 04-01-19
ONGC Buyback 2018
The details of ONGC buyback are given in the table below.
Particulars | Buyback 2018 | ||
|---|---|---|---|
| Announcement | 14-12-18 | ||
| MP a day befo | 148.5 | ||
| Board meeting | 20-12-18 | ||
| Buy Back Type | Tender Offer | ||
| Buy Back Price | 159 | ||
| MP bef BM | 148 | ||
| MP aft BM | 148.1 | ||
| % Premium on MP | 7.07% | ||
| BuyBack in Rs. Crore | 4022.00 | ||
| Buy Back ( Shares) | 252,955,974 | ||
| Equity Capital in cr | 6416.62 | ||
| Tot No. of shares | 12,833,235,180 | ||
| FV in Rs. | 5 | ||
| Govt Holding in co. | 67.48 | ||
| Individual Holding | 15.73 | ||
| % Buyback | 1.97% | ||
| Record Date | 04-01-19 | ||
| Shrs reserved for Retail | 37,943,396 | ||
| Buyback Issue Date | 29-01:11-02-19 | ||
| Shares on RD Buyback | 142,925,538 | ||
| Buyback Entitlement | 26.55% | ||
| Shrs Tendered - retail | 29,645,437 | ||
| Tendering ratio | 20.74% | ||
| Retail response | 78.13% | ||
| Aceeptance % | 100% | ||
ONGC Buyback: Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of ONGC shareholders who hold around 1500 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.
Based on approximations indicated above, the entitlement ratio forIEX Buyback is not expected to be high. Considering a av. tendering ratio, under normal circumstances ONGC Buyback could have an acceptance ratio of 35-50% depending on how much new arbitrage investors buy into the stock. Subsequently ONGC saw less arbitrage activity due to which Acceptance Ratio is now estimated to be between 50-70%.
Estimated Returns for ONGC 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 | 1260 | Nos. | |
|---|---|---|---|
| Buyback Price | 159 | ||
| A) Abs Returns | |||
| MP taken | 147.2 | ||
| Investment | 185472 | ||
| Pr aft buybk | |||
| Acceptance% | 138 | 140 | 144 |
| 50% | 0.88% | 1.56% | 2.92% |
| 60% | 2.31% | 2.85% | 3.94% |
| 70% | 3.74% | 4.14% | 4.96% |
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
ONGC: Bonus and Dividends
Bonus in Oct 2016. 1:2 of Rs. 5 each equity share
Dividends: in FY17-18, ONGC declared equity dividend of 132.00% amounting to Rs 6.6 per share. This translated to dividend yield of 4.5%.
About ONGC
- Oil and Natural Gas Corporation Limited is a global energy holding company
- ONGC is the largest crude oil and natural gas Company in India, contributing around 70 per cent to Indian domestic production
and has a market share of 97 percent. - ONGC ranks 11th among global energy majors as large Natural Gas company. ONGC ranks 18th in ‘Oil and Gas operations’ and 183rd overall in Forbes Global 2000.
- ONGC Videsh is a wholly owned subsidiary of Oil and Natural Gas Corporation Limited (ONGC), the National Oil Company of India, and is India’s largest international oil and gas Company. ONGC Videsh has participation in 41 projects in 20 countries namely Azerbaijan, Bangladesh, Brazil, Colombia, Iraq, Israel, Iran, Kazakhstan, Libya, Mozambique, Myanmar, Namibia, Russia, South Sudan, Sudan, Syria, United Arab Emirates, Venezuela, Vietnam and New Zealand.
ONGC : Price Trend, Summary of Financials
Quarterly Results:
| Parameter | Figures |
| Market Cap (in ₹ Cr.) | 190,253 |
| CMP | 148.25 |
| BV | 158.71 |
| P/ BV | 0.93 |
| FV | 5 |
| Price To Earnings (P/E) Ratio | 7.51 |
| OPM | 46.27 |
| PAT Margin (%) | 23.04 |
| ROCE (%) | 15.03 |
| Total Debt to Equity (D/E) Ratio | 0.13 |
Assessment: ONGC Buyback
- ONGC is virtually debt free despite having taken over HPCL stake
- ONGC Stock is providing a dividend yield of 4.45%.
- ONGC declared good Q2FY19 prices aided by rising crude oil price.
- ONGC’s net profit stood at Rs 8,265 crore in the quarter ended 30 September, compared with Rs 5,130 crore a year earlier.
Income from operations rose 47.5% to Rs 27,989 crore. - Company has been maintaining a healthy dividend payout of 70%
- ONGC is also considering listing of ONGC Videsh on domestic exchanges.
- Market has been concerned about the possible subsidy share in the election year, which is likely to get away with expected fall in oil prices.
- ONGC buyback plan is likely to increase its overall indebtedness and thus is not positive for stock price.
- ONGC is likely to defer dividend on account of buyback.
- Though ONGC price is suppressed being an election years, purely based on issue size, buyback price there is only a little attraction for arbitrage investors at this price ( See latest comments as due to Little arbitrage interest ONGC buyback has turned attractive). However if ONGC is able to maintain a reasonable price post buyback as it is in F&O & its ability to post good numbers, the returns may increase marginally.
- LATEST: ONGC saw less arbitrage activity due to which Acceptance Ratio is now estimated to be between 50-70% and those who bought for buyback are expected to gain.
- 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.
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.