Emami Limited Buyback Offer 2023
(Updates 13Apr2023, 29Mar2023, 28Mar2023, 24Mar2023 are available below. Even though this blog was posted originally on 22Mar2023, I will be continually updating this blog whenever new information is made available on the buyback offer.)
Emami Limited, a listed company in India, on 21Mar2023 announced that its board of directors would meet on 24Mar2023 to consider a buyback proposal for its fully paid-up equity shares of Re 1 face value each. The announcement was made after closure of market hours on 21Mar2023.
2. The
date of announcement (that is, 21Mar2023) is significant because it's
exactly one year from the date of closure of its 2022 buyback, which
started on 09Feb2022 and closed on 21Mar2022.
3. As
per the guidelines of India's capital market regulator, Securities and
Exchange Board of India (SEBI), there should be a minimum gap of one
year between two buyback proposals.
(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)
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Related Blogs:
When Is The Next Buyback Offer Likely To Be?
Ajanta Pharma Buyback Offer 2023
Natco Pharma Buyback Offer 2023
Indian Energy Exchange Buyback Offer 2022
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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
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4. The company's share price on 21Mar2023 was Rs 345 per share, with a market cap of Rs 15,200 crore. Reacting positively to the buyback proposal, the share price rose by 6.20 percent to close at Rs 366.40 on 22Mar2023, with a market cap of Rs 16,160 crore.
5. Company's valuation and peer comparison as at close of 22Mar2023 >
6. Timeline of activities to be watched: Table 1 >
7. The company in the recent past made two buyback offers, both through the 'open market via stock exchanges' mechanism, not including the current buyback proposal. Details are in table 2 >
8. Table 3 showing percentage of shares cancelled in the past two offers >
Update 24Mar2023
9. As scheduled, the board of the company met on 24Mar2023 and approved the buyback proposal via 'open market through stock exchanges' route. The share price on 24Mar2023 closed at Rs 360 per share, with a market cap of Rs 15,880 crore.
10. As per Regulation 15 (i) of Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018
(as amended by SEBI on 09Feb2023 effective 09Mar2023), a minimum of 75 percent
of the total buyback amount set aside (maximum buyback size) should be
used by the company in the total period of the buyback offer.
11. As per Regulation 15 (ii) of Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 (as amended by SEBI on 09Feb2023 effective 09Mar2023), a minimum of 40 percent of the total buyback amount set aside (maximum buyback size) should be used within first half of the specified duration of opening and closing of buyback proposal.
Details are updated in tables 2 and 4 below >
Update 28Mar2023
12. On 27Mar2023, the company announced more details about the buyback offer:
a) as per Regulation 17 (ii) of Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 (as amended by SEBI on 09Feb2023 effective 09Mar2023), the Buyback Offer shall open not later than four Working Days from the date of the Record Date and shall close within sixty-six Working Days from the date of the opening of the Buyback;
b) as such, Emami Limited has fixed 12Apr2023 as the record date * for the purpose of determining only the opening of Buyback in this 'open market' buyback route; and
(
* important clarification: the record date for determining only the opening of buyback used in 'open market' buyback route should not be confused with record date for determining the entitlement and names of shareholders who are eligible to participate in 'tender offer' buyback route' -- in
the 'open market' route of buyback offers, there is no concept of record date
for determining the entitlement and eligibility of shareholders to participate in a buyback)
c) so, the buyback will open on 13Apr2023 and close on 19Jul2023 (which fulfills Regulation 17 (ii) cited above).
Company announcement on Record Date >
SEBI Regulation 17 (ii) of SEBI Buyback Regulations >
Update 29Mar2023
13. On 28Mar2023, the company made a public announcement giving full details of the buyback offer -- an extract of the resolutions of the Board meeting held on 24Mar2023 and 27Mar2023 is enclosed to the public announcement. Key highlights from public announcement are:
-- the Company shall not make any offer of buyback within a period of one year from the date of closure of the buyback
-- as per provisions of Companies Act, 2013 and SEBI Buyback Regulations, 2018, an approval from the shareholders of the company undertaking buyback is required if the Maximum Buyback Size is more than 10 percent of the total paid-up capital and free reserves (free reserves include general reserve and retained earnings) of the Company based on lower of standalone and consolidated audited financial statements of the Company as on latest available balance sheet; if the maximum buyback size is not more than 10 percent of the total paid-up capital and free reserves of the Company, an approval from the Board of Directors is sufficient to undertake a buyback
-- in the case of Emami Limited, the Maximum Buyback Size is not more than 10 percent of the total paid-up capital and free reserves of the company based on lower of standalone and consolidated audited financial statements of the Company as on March 31, 2022 -- as such approval from the shareholders of the Company is not required (the Board approval required for the Buyback was granted by the Board on 24Mar2023) -- screenshot is enclosed
14. When can Emami Ltd close the buyback?
The last date for closure of the buyback is earlier of:
a) sixty six Working Days (that is, 19Jul2023) from the date of the opening of the Buyback; or
(b) when the Company completes the Buyback by deploying the amount equivalent to the Maximum Buyback Size; or
(c) at such earlier date as may be decided by the Board of Directors, after giving notice of such earlier closure, subject to the Company having deployed an amount equivalent to the Minimum Buyback Size (even if the Maximum Buyback Size has not been reached or the Maximum Buyback Shares have not been bought back) -- however, that all payment obligations relating to the Buyback shall be completed before the last date for the Buyback.
Update 13Apr2023
15. The buyback offer (via stock exchanges' open market route) opens today and closes on date as mentioned in para 14 above. The stock closed yesterday at Rs 359.50 per share, with a market cap of Rs 15,860 crore.
(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:
BSE weblink for buyback offer 2023
BSE weblink cumulative shares bought back in buyback offer 2023
post-buyback announcement dated 22Mar2022
post-buyback announcement 10Jul2020
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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.
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