Tuesday 7 March 2023

Ajanta Pharma Buyback Offer 2023 - vrk100 - 07Mar2023

Ajanta Pharma Buyback Offer 2023

 


 

(Updates 20Apr2023, 18Apr2023, 09Apr2023, 29Mar2023, 18Mar2023, 14Mar2023 and 10Mar2023 are available below. Even though this blog was posted originally on 07Mar2023, I will be continually updating this blog whenever new information is made available on the buyback offer.)  

 

(This is for information purposes only. This should not be construed as a recommendation or investment advice. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

 

Ajanta Pharma Limited on 06Mar2023 (after closure of market hours) announced, through a BSE stock exchange filing, that its board of directors would meet on 10Mar2023 to consider a proposal to buy back the company's fully paid-up equity shares with a face value of Rs 2 each. 

2. As at close of 06Mar2023, the company's share price is Rs 1,165.05 per share, with a market cap of Rs 14,927 crore.


 

(story continues below)

(I have, over the years, analysed a number of companies' buyback offers. You can check them in the related blogs section below)

-------------------

Related Blogs:

Natco Pharma Buyback Offer 2023

Indian Energy Exchange Buyback Offer 2022

Jagran Prakashan Buyback Offer 2022

Kaveri Seed Company Buyback Offer 2022

Infosys Limited Buyback Offer 2022

Zydus Lifesciences Buyback Offer 2022

FDC Limited Buyback Offer 2022

GE Shipping Company Buyback Offer 2021  

Kaveri Seed Company buyback offer 2021

Crompton Greaves Buyback Offer 2013

-------------------

 3. The trailing 12-month or TTM price-earning or P/E ratio of the stock is 24.3, its price-to-book or P/B ratio is 4.2 and its price-to-sales or P/S ratio is 4.0 (all as on 06Mar2023). See the following two screenshots for more on valuation and peer comparison > 

 



 
4. In general, buyback offers take three to six months to complete depending on which route the company takes for buyback. (There are basically two routes companies take for share buybacks or repurchases -- one is 'tender offer' route and another is 'buyback in open market via stock exchanges.') So, it's necessary for investors to follow activities related to the buyback offer throughout the process. 
 
A typical list of activities is given in table 1 below >
 

 
5. To the best of my knowledge, the company has made three buyback offers in the past, between 2019 and 2022. All these three offers were made through 'tender offer' route; in which, the promoters participated in all the buyback programmes.
 
6. The 2023 offer is the fourth in the company's history. Details regarding the 2023 offer will be known after the scheduled board meeting on 10Mar2023.
 
The details of the buyback are given in table 2 below >
 
 
 
7. As shown in above table 2, the previous buyback prices (adjusted for 1:2 bonus issue in Jun2022) through tender offers were above the current market price of Rs 1,165 per shares. So, it'll be interesting to see at what price the company will fix the buyback price in the current proposal.
 
8. Details of what percentage of equity shares were extinguished during the buyback offers are given in table 3 below. The company extinguished between 0.84 percent and 1.29 percent of outstanding shares in each offer in the past four years.



9. As all the past three buyback offers were through 'tender offer' route, promoters were eligible to participate in the buyback offers. Details of promoters' holding pre- and post-buyback are given in table 4 below >
 

Update 10Mar2023

 

10. As As scheduled, the company's board of directors, during their meeting on 10Mar2023 announced brief details of the buyback proposal. Like the past three buyback offers, this time too the company has chosen the 'tender offer' route to buy back its own equity shares. And the record date (as well as ex-date) for buyback is 24Mar2023. 
 
The brief details are given in table 5 below >
 

 
11. As shown in table 5 above, the offer size is Rs 315 crore; excluding buyback tax; and the size is Rs 389 crore, including buyback tax of Rs 74 crore.

12. The proposed 2023 buyback price of Rs 1,425 per share is below the 2022 buyback price of Rs 1,700, but above the 2020 buyback price of Rs 1,233.33. The share price on 10Mar2023 closed at Rs 1,227, with a market cap of Rs 15,721 crore.
 
The updated table 2, comparing all the four buyback offers via 'tender offer,' is given below >
 

Update 14Mar2023

 

13. Today, the company issued a public announcement giving full details of the buyback programme. The announcement includes an extract of the minutes of Board meeting held on 10Mar2023.
 
 
Update 18Mar2023


14. A copy of the public announcement is uploaded on SEBI website. 
 
 
Update 29Mar2023


15. The company yesterday filed its 'Letter of Offer' for buyback of its shares via 'tender offer.' Key highlights from the offer are:

-- the promoters have expressed their intention to participate in the buyback offer


16. The entitlement ratio for 'small shareholders' (Reserved Cateogry) is 20.205 percent -- which means roughly 20 shares are eligible for buyback for every 99 shares held by eligible small shareholders as on record date.

 

17. The entitlement ratio for General Category (all shareholders other than 'small shareholders') is 1.486 percent -- which means nearly 3 shares are eligible for buyback for every 202 shares held by eligible general category shareholders. 


Details of calculation are given in tables 6 and 7 below:



 
Update 09Apr2023


18. As stated in Letter of Offer dated 28Mar2023, the buyback offer (via 'tender offer' route) opened on 31Mar2023 and it closes on 10Apr2023. Investors who wish to participate in the buyback offer need to surrender their shares, on or before 10Apr2023, as per the entitlement ratio and eligibility.


Updated Timeline of activities is enclosed >


Update 18Apr2023


19.The company's tender offer buyback closed on 10Apr2023. And by the end of today, that is, 18Apr2023, eligible shareholders who participated in the buyback should have received the money into their bank accounts. 

The share price today closed at Rs 1,298 with a market cap of Rs 16,344 crore (based on outstanding shares post-buyback).

Updated Timeline of activities is enclosed >


 
Update 20Apr2023


20. The company issued a post-buyback public advertisement, giving details of bids accepted, post-buyback shareholding and others.

Table 8 below provides details of bids accepted under the tender offer route of the buyback offer: in the small shareholders category, valid shares received were more than two times the shares available for buyback and in the general category, valid shares received were more than 33 times the shares available for buyback.

 


 21. Brief details of all the buyback offers by the company, details of shares extinguished via buybacks and post-buyback promoters' stake are updated in the following three tables:

 -- in the past four buyback offers, the company was able to extinguish 4.64 percent of its paid-up equity capital

 -- promoters' stake in the company has declined to 66.2 percent of total shareholding from 70.5 percent in 2019 after four buyback offers





 

(I'll be updating this blog as and when new developments take place in relation to the buyback offer -- to comment on business model, profit, solvency, liquidity, shareholding pattern, MF holdings, whether buyback from debt, capital allocation optimal, etc.)  

 

- - -

References:

post buyback public advertisement 19Apr2023

post buyback announcement 25Feb2022

post buyback announcement 24Dec2020

post buyback announcement 22Mar2019


-------------------
 
Read more:  
 
Natco Pharma Buyback Offer 2023
 
When Will US Federal Reserve Stop Hiking Interest Rates?
 
Why Do Indian Equity Mutual Funds Always Disappoint Investors?

Adani Stocks Meltdown and Nifty Next 50 Index

Are Indian Stocks Immune to Adani stock Meltdown?

Meltdown in Adani group Listed Stocks

JP Morgan Guide to Markets

Why the Divergence Between Sensex and Nifty 50 in Today's Trade?

Indian Stock Market Moves Fully to T+1 Settlement

NSE Indices Comparison 31Dec2022

BSE 500 vs S&P 500 Indices Compare 31Dec2022

India Up the Ladder in MSCI EM Index 

New Rules on Ex-date and Record date

Crisil Report - Big Shift in Financialisation 

Weblinks and Investing

-------------------

 

Disclosure:  I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets. 

CFA Charter credentials  - CFA Member Profile

CFA Badge

 

He blogs at:

https://ramakrishnavadlamudi.blogspot.com/

https://www.scribd.com/vrk100

Twitter @vrk100

No comments:

Post a Comment