PBM Polytex Buyback as approved in its board Meeting on 21-02-19, entails a buyback of Buy-back of up to 13,75,000 Equity Shares of the Company at the price of Rs. 80/- per Equity Share for a total consideration not exceeding Rs. I 1,00,00,000/- ( 11 Crore). PBM Polytex Buyback is 16.91% of the paid-up share capital of the Company and is on a proportionate basis under “Tender Offer route”. Record Date for PBM Polytex Buyback is 08.03.19.
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PBM Polytex Acceptance ratio ended at 100%
PBM Polytex Buyback
Shares Bought | 2000 | Nos. | |
|---|---|---|---|
| Buyback Price | 80 | ||
| Absolute Returns | |||
| Price when posted | 73.00 | ||
| investment (Rs.) | 146000 | ||
| MP Aft Buybk | |||
| Acceptance % | 70 | 73 | 76 |
| 40% | 1.37% | 3.84% | 6.30% |
| 50% | 2.74% | 4.79% | 6.85% |
| 60% | 4.11% | 5.75% | 7.40% |
PBM Polytex Buyback : Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of PBM Polytex shareholders who hold around 2500 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 acceptance ratio for PBM Polytex buyback may hover around 40-60% depending on how much new arbitrage investors buy into the stock which will also influence the tendering ratio.
Estimated Returns for PBM Polytex 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.
Buyback 2018 | |
|---|---|
| Announcement | 04-02-19 |
| MP on the day | 76.0 |
| Board meet | 21-02-19 |
| Type | Tender |
| Buy Back Price | 80 |
| MP befo BM | 80 |
| MP after BM | 76 |
| % Premium on MP | 0.00% |
| BuyBack Size- Rs. Cr | 11 |
| BuyBack Size- Shares | 1,375,000 |
| Equity Capital- cr | 8 |
| Tot No.of shares | 8,130,000 |
| FV of Share in Rs. | 10 |
| % Buyback | 16.91% |
| Record Date | 08-03-19 |
| Buy Back Issue date | 11-04:26-04-19 |
| Shares reserved- Retail | 206,250 |
| Shares on RD | 902966 |
| Buyback Entitlement | 22.84% |
| Shares Tendered | 10798 |
| Tendering ratio | 1.20% |
| Retail response | 5.24% |
| Aceeptance % | 100% |
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 Investor
About PBM Polytex
- PBM Polytex belongs to Patodia group of Industries.
- The Company manufactures 100% cotton yarn which is sold indigenously as well as in export market.
- The Company’s two yarn spinning Mills are situated a. Anand, Gujarat and in Chhindwara (M.P)
- The Company also has four Wind Mills at various locations in Gujarat.
PBM Polytex : Price Trend, Summary of Financials
| Market Cap in Rs. Cr | 66 |
| Revenue FY18 in cr | 196.88 |
| CMP in Rs. | 76 |
| Face Value | 10 |
| Price / Earning (PE) | 7 |
| Book Value | 137.5 |
| Price / BV | 0.55 |
| ROCE | 5.56% |
| ROE | 6.34% |
| Dividend Yield | 4.34% |
| Sales 3 yr CAGR | -3.17% |
| Debt / Equity Ratio | 0.05 |
Assessment: PBM Polytex Buyback
- PBM Polytex Buyback size is small due to which there is no need for getting shareholders approval for buyback.
- The last financial year was full of problems for all the Textile units in the country including Spinning Units.n account of demonetization and the enacting of GST. It affected the exports too.
- PBM Polytex is virtually debt free.
- The company has delivered a poor growth of over past few years and its ROE is low.
- Company has been maintaining a healthy dividend payout.
- Stock is trading at 0.59 times its book value and PE ratio of less than & but its other peers in spinning are also trading at similar PE .
- The company is a small cap stock with market cap of Rs. 70 crore only and hence there could be price volatility post buyback. The stock which had moved past Rs. 80 (the buyback price) before the buyback announcement has come down due to lower buyback price announced by the company.
- Other group company Eurotex industries has witnessed significant downtrend in its price and is quoting at Rs. 15 presently.
- 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.