Risk Free Arbitrage Opportunities......Take them or leave them?

Some digging in history:

Investment and precision castings ltd:

Announced on 3rd July 2008 on BSE,that the company will be holding a meeting on 31stJula08 to obtain the consent of the equity shareholders and unsecured creditors, with or without modification, of the Scheme of Arrangement and Demerger between the Company i.e. Investment & Precision Castings Ltd and Tamboli Capital Ltd.

This is the link of the announcement made on BSE:


On Februay 4th 2009,Investment & Precision Castings Ltd in an corporate announcement informed BSE that CRISIL assigned its ratings to BBB+/STABLE/P2 tothe variousbank facilities of the Company.

This is the link of the announcement made on BSE:


On 25thFeba09 Investment & Precision Castings Ltd informed BSE that the Board of Directors of the Company have determined March 20, 2009 as the Record Date.The swap ratio fixed by the Board is as below:

2 New Equity Shares of Tamboli Capital Ltd for every 1 share of Investment and Precision Castings held by theshareholdersof the Company

This is the link of the announcement made on BSE:


In February 2009, the share price of Investment and Precision Castings Ltd, was trading in a range of 37/- to 44/- , So if one had bought this stock in this range, say an average rate of 41/- to a share and we take a 1000 shares, that comes to around (41*1000=41000/-) forty One thousand rupees as investment.

The ex- date was on 13 th march 2009, and the stock price made a high of 44/- and a low of 25/-, again we take the avg. price here, i.e., which comes to 34/-, So say we sold the Investment and precision castings ltd shares which we bought at 41/- per share @ 34/-.

As a Result of the Demerger arrangement, we would have been in possession of 2000 shares of Tamboli Capital at a share price of 3.5/- per share.

Sum: (41/-*1000/-=41000/- - 34/-*1000/-=34000/-), so (41000/- - 34000/- = 7000/-) and as we got 2000 shares as a result of demerger (7000/- / 2000/- = 3.5 Rs per share price of Tamboli Capital ).

All in all we made a loss of 7000/- initially by selling the shares of Investment and Precision Castings Ltd and got back 34000/- and 2000 shares of Tamboli Capital @ 3.5/- per share. Which will soon be listed on the stock exchanges on some later date.

Lets see what happened going forward…

On March 15, 2010…nearly a year later Tamboli Capital got listed on BSE at a whopping price of 44.80, That day the high price was 44.80 and the low price was 41.10/- and the close was 43.20. Suppose we sold our shares at the day low of 41.10/-, remember our initial acquisition price was a mere 3.5/- per share. so 41.10/- - 3.5/- = 37.6/- per share, We had 2000 shares, So the Profit works out to be 37.6/-*2000 Shares = 75200/- on an initial investment of 7000/- rupees. A 10 bagger in the making.

Factors affecting us to be noted…

Demerger announcement was near the end of Bear market, and the listing of the demerged entity was in a Bull Market.

Not always, we will find such aribitrage opportunities in the market, i mean the returns will not be phenomenal like this one, but some times we do find and they might be worth looking and studying into.

I have explained the above example, as i know there are lot of smart minds contributing to this forum, who will look into such opportunities going forward and we all will get benefited discussing them.

Warm Rgds.

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nice illustration Manish.

Any present opportunities that you’re looking at…

Currently looking at two:


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As per the scheme of amalgamation of Borosil Glass Works, two Gujarat Borosil shares are equal to one share in Borosil Glass Works. Gujarat Borosil is providing an opportunity to acquire Borosil at about 30 percent discount. This is of course assuming the amalgamation goes as per the scheme announced.
Disclosure: invested in Gujarat borosil

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Mphasis board approved a proposal to buyback shares worth up to Rs 988.27 crore at a maximum price of Rs 1,350 per equity share.
As on 10th August the Mphasis market price is around Rs.1164

Below are some analysis one can refer. Experts views are greatly appreciated.


Borosil Price is consolidating around Rs.310.Once the Bonus shares are sold by short term players share price may move up.
Disclosure: Invested prior to Bouns share record date.So my views may be biased.

Mphais Buy back update :The record date has been fixed for 25th October, 2018. As per SEBI norms, 15% of the buyback is to be reserved for retail shareholders ( Rs 1,350 is the buy back price )

Given the very low retail ownership, possible that acceptance ration can be around 50%? Given that the CMP is around 1000 bucks, 1350 buyback looks attractive The only concern seem to be that IT companies are under selling pressure due to rich valuations. Any more views on this are Solicited.

based on the latest SHP for Sep, the retail ownership has gone up by 40%. Looking at similar buybacks like Jagran Prakashan (20% acceptance) and their resultant secondary market behavior post buyback completion, Mphasis buyback doesn’t sound too lucrative

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Last Mphasis buy-back had 100% acceptance. How much acceptance ratio are you estimating?

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Any views on L&T buyback? Record date was Oct 12. Should I participate if I hold? The offer is at 1475 which is approx 18% over the price I recently bought i.e 1230

CMP = Rs. 1,080. Stock is fairly expensive at 21x PE.

Note that last year’s buyback came at Rs. 635 vs Rs. 1,350 this year.

Out of the 73.2 lac shares to be bought back, ~11 lac shares were reserved for retail category and there were ~13.5 lac shares held by retail guys holding <500 shares, in Mar '18. Assuming Mar '18 shareholding pattern, retail acceptance ratio might’ve been ~80% (11/13.5).

However, there’s been a huge jump (43.4 lac shares went upto 62.3 lac shares) in the shareholder category of “Individuals share capital upto Rs. 2 Lacs” between Mar '18 and Sep '18. Most of this increase happened during the June-Sep period, so one can only assume that it’s happened due to the arbitrage opportunity.

Adding this additional supply of 19 lac shares to 13.5 lac would give us a lower end acceptance ratio of 34% (11/32.5).

As a conservative rough estimate, I’d go with a ~40% acceptance ratio ((11 lac) / (70%*13.5 + 95% *19)) = 11/(9.45+18.05) = 11/27.5.

So a 25% upside on 40% acceptance = 10% gross profit less 15% taxes less brokerage = 8-8.5% net profit.

This net profit over the remaining 60% shares = 13-14% downside protection for the next 3 months in this current market. Unfortunately, unlike last year, the underlying share is somewhat expensive, so I’m taking a pass.

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Hi All ,

I want to revive this thread. Below are few of arbitrage opportunities which I am aware of

  1. Minda Industries Limited(MIL) Merger with Harita Seating Systems Limited (HSSL)
    Share holders would get 152 shares of MIL for every 100 shares of HSSL.

  2. United Spirits Limited(USL) Merger with its subsidiary Pioneer Distelleries
    Share holders would get 10 equity shares of USL for every 47 equity shares of Pioneer Distilleries.

Request everyone to keep this thread active and keep posting about any arbitrage opportunities.

Thank You :slight_smile:


The merger date appears to be 1st Feb, isn’t it ?

Alembic ltd

share price 85Rs ,market cap :- 2184Cr

Assets under company
1)Holds 28.54% of Alembic pharma, Market cap :-15157Cr
Not to mention a view months back market cap of alembic pharma at peak was 20% but due to high commodity prices , almost all pharma companies have taken a margin hit,No one knows if this temporary we can only guess but heavy promoter buying is just a sign that they have confidence in business. Moreover stock has been a multibagger with 31% Cagr and 30% compounded profit growth to back it up.

2)Holds 19.07% of Paushak ltd , Market cap :-3,579 Cr

No Idea about this buisness but stock apart from:- Paushak is India’s largest phosgene based specialty chemicals manufacturer serving pharmaceutical, agrochemical and performance industries.

3)Company is also into Real estate Buisness constructing

calculating value of this will be extremely tough but what i could dig in was they are making a residential complex VEDA 2 with 367 flats starting at 45 lakhs ,even if we take pessimistic assumption they get 45 lakhs for all flats this alone is worth 165 cr while balance sheet values land at 117 Cr and they have bigger projects and land banks.

overall not including the real estate business you get a 5500cr worth of assets all growing at 25% cagr at a price of 2100 cr

disc:invested would love some insight on other 2 buisness.


This is not really a typical arbitrage opportunity!

It is holding company structure, and carrying holding company discount. Discount keeps fluctuating based on market and company condition but never gets closed, unless there is some kind of liquidation/rearrangement etc.

It is very normal for such companies to trade at 30 to 80% discount to sum of parts.

Please let me know ,if you know any such stocks with more then 50% discount and such a great business would love to buy or track them at support levels.

Tata Invesment Corporation is one such company.

For example : Kama Holding (MCAP 7767Cr) own ~50% of SRF, (Market Cap 81,445 Cr), also have other significant businesses.

JSW Holdings
Bajaj Holdings
Rane Holdings
Vardhman Hold.
Kama Holdings
Chola Financial

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