Triveni Engineering on07-08-20 had informed that the Company shall be considering a proposal of Buyback of the fully paid-up equity shares of the Company int its Board Meeting to be held on 11-08-20. Triveni Engineering Buyback approved by its Board comprises proposal for buyback of fully paid up equity shares of the Company having a face value of
1 (Rupee One only) each ('Equity Shares'), not exceeding 61,90,000 (Sixty one lakh ninety thousand) Equity Shares at a price of 105 (Rupees One hundred five only) per Equity Share payable in cash for an aggregate amount not exceeding Rs. 64.995 crore
The Triveni Engineering Buyback is 2.5% of the paid up equity share capital of the Company as at March 31, 2020 and is on a proportionate basis under “Tender Offer” route. The Buyback Offer Size represents 5.31 % and 5.03% of the fully paid-up equity share capital and free reserves (including Securities Premium Account) as per the latest audited standalone and consolidated balance sheet of the Company for the financial year ended March 31, 2020. Record date for Triveni Engineering Buyback is 28-08-2020.
- Acceptance 22.4%
- Entitlement 6.4%
- Issue 05-10:16-10-2020
- RD : 28-Aug-20
Triveni Engineering Buyback 2020 and 2019 : Key Info
|MP befo announcement||56||66|
|Price befo BM||71|
|Buy Back Price||105||100|
|% Premium on MP||47.89%||51.52%|
|BuyBack Size- Rs. Cr||64.995||100|
|BuyBack Size- Shares||6,190,000||10,000,000|
|Tot No.of shares||247,945,110||257,945,110|
|Equity Capital- cr||24.79||25.79|
|FV of Share in Rs.||1||1|
|Buy Back Issue date||5:10-16-10-20||22-07:02-08-19|
|Shares reserved- Retail||928,500||1,500,000|
|Shares on RD||14,537,410||14,118,154|
Triveni Engineering Buyback : Acceptance Ratio Estimate
This framework is based on estimation of shareholding of Triveni Engineering 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 & data from previous buybacks.
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Triveni Engineering Buyback could have acceptance ratio of 10-20%, a figure that will depend significantly on price movement of the stock in coming days.
Estimated Returns: Triveni Engineering Buyback
|Price when posted||77.00|
|MP Aft Buybk|
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.
About Triveni Engineering
- Triveni is one of the largest integrated sugar manufacturers in India, with seven sugar mills strategically located across the western, central and eastern parts of the sugarcane rich areas of Uttar Pradesh (U.P.) – India’s largest sugarcane producing state.
- Integrated production concept ensures that almost all the raw material is converted into high quality products.
- Two of our facilities, Khatauli and Sabitgarh, produce refined sugar, which accounts for almost 40% of total sugar production, while the other five units manufacture white sulphitation sugar. The Sabitgarh unit also produces different grades of Pharmaceutical sugar that can be customized as per customer’s requirements.
- Triveni presently operates grid-connected three cogeneration plants, and three incidental co-generation plants located across five sugar units which facilitate the export of surplus power to Uttar Pradesh Power Corporation Limited (UPPCL).Triveni currently operates 104.5 MW grid connected co-generation capacity.
- It has one of the largest and most efficient single stream molasses-based distillery in the country, located at Muzaffarnagar, which operates on captive feed stock from our sugar units .
- The Company produces premium quality multi-grade crystal sugar, raw, refined and pharmaceutical sugar. All of theSugar units are FSSC-2000:2010 certified. The sugar is supplied not only to household consumers but also to bulk consumers.
- The Company has supply chain relationship with leading multinational beverage, food & FMCG companies, pharmaceutical companies and leading confectionery producers. It also has a strong presence in branded sugar market through its brand “Shagun”. The distillery at Muzaffarnagar produces Ethanol, Extra Neutral Alcohol (ENA) and Hand Sanitizers” under the brand “GermCare. The new distillery commissioned at Sabitgarh producesEthanol.
- Triveni Gears has been delivering customized solutions for industrial gearboxes for the past four decades. It is one of the Largest engineered to-order turbo gearbox manufacturer in India with manufacturing facilities located in Mysuru.
Triveni Engineering: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||1,909|
|CMP in Rs.||77|
|Revenue – cr. (TTM)||4,725|
|Net profit-cr (TTM)||373.45|
|Equity Share Capital||24.79|
|Price / Earning (PE)||5.11|
|Price / BV||1.50|
|Sales 3 yr CAGR||18.07%|
|Debt / Equity Ratio||1.09|
|52 week H/L Rs.||88.45 / 28.65|
Assessment: Triveni Engineering Buyback
- Sugar industry is dependent on Government to provide subsidy for port which helps to check the price & prevent a glut situation in the country. The fortunes of industry swing with international sugar prices, government support & domestic prices.
- Triveni has delivered good profit growth of 24.98% CAGR over last 5 years
- The company has a good return on equity (ROE) track record with 3 Years ROE of 25.08%.
- Triveni Engineering had a good quarter in Q1FY21.
- While Sugar and Alcohol businesses performed well, the Engineering businesses were impacted in Q1 due to the pandemic.
- Revenue from Operations at 1223.81 crore, showed a growth of 32%.
- Profit before Tax at 129.17 crore, a growth of 175%
- Profit after Tax at ` 83.75 crore, a growth of 146%.
- Promoter holding in Triveni Engineering is about 68%
- Company is not debt free.
- Triveni Engineering Buyback price is at a reasonable premium to its prevailing market price. Howver the stock has rallied considerably after the announcment for buyback and the also after announcement of buyback price. The stock already moved up from Rs. 55-56 levels.
- Considering the size of issue the company there is no need for a postal ballot to seek share holders approval and hence the total time period will be lower than normal buybacks.
- Triveni Engineering is not in F&O which may keep stock under pressure post buyback.
- Good domestic trends and favourable internation prices may be working for the company.
- A key risk in entering into buybacks right now is that markets are at high and buyback process takes some time for completion. While Triveni enginerring is a good company and good performance provides some some cushion. how long the market moves continue this way is quite uncertain due to COVID.
- The buyback is smaller than the buyback last year.
- Given the small size of Triveni Engineering Buyback and a sharp run up, I would like to enter Triveni Engineering buyback on small correction which is constrained by the approaching RD for buyback.
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.