Tracking Special Situations

Tracking Buyback Case study of Tips Industries:

Company announced the approval of buyback dated February 13,2020. The company has fixed Friday April 3, 2020 as the Record Date for the purpose of determining the entitlement and the names of the equity shareholders who are eligible to participate in the buyback.

Shareholding pattern as on Dec 2019

Analysis of Buyback

Now, the retail proportion is buybacks tends to be 15%. Hence the available shares of buyback for the retailer comes out to be 2,02,500 number of shares.


Here the retail shareholders can go for 2247 share, but considering the point that the share price can increase till buyback one can go for 2000 shares which will almost cost around 1,78,000 Rs (considering the price of 89Rs).

Not let’s consider the point, that the number of retail shareholders in Tips Industries is 16,86,381. In order to understand the data of retail shareholders of Dec 2019 (Individual Share Capital Upto 2 Lac) we have considered that there is 10% increase in the retail shareholders, considering the increase in participation of the buyback and the steep fall in the share price of the company. This turns out the total estimation of retail shareholders as 18,55,019 shares.


Understanding the Calculation
By taking scenario 1 where it is expected that 40% of shareholders apply in the special situation;

So the applied quantity of shares would be 40%*18,55,019 (total retail shares) i.e. 7,42,008 (number of shares).

Now the extra shares which would be left over would be applied quantities – retail shares in buyback (7,42,008 – 202500) i.e 4,72,727 which means shares applied for the buyback would be 3.66x.

So the actual shares which could be tendered for buyback would be 2000/3.66 i.e 546 number of shares.

Now if we calculate the return on money it will give us;

(140 – 89) * (546) = 27,837 Rs

i.e. (buy back price – current market price) * shares bought back

And the investment return for the same would be 15.64%

Now out of 2000 shares only 546 were tendered and 1454 shares were still left in our portfolio. So after our return from applied buyback, our total investment value in Tips Industries would be 1,01,586 Rs.

Our initial investment in the company was 1,78,000 Rs. With 40% applied ratio on buyback, the return we get from the the buyback shares would be 76,414 Rs (546 * 140) i.e. Shares Tendered for Buyback * Buyback Price.

So after buyback our net investment value in the company turns out to be 1,01,586 Rs (1,78,000 – 76,414) i.e. Total invested price – Return from applying for Tender. So the average price of our investment after buyback is 70 Rs (1,01,586 / 1454) i.e. Shares value left in buyback / Remaining shares after Buyback.

Now we have considered 3 different cases, of price of Tips Industries after the buyback. Looking at the historic price and historic PE of the company, the lowest PE of Tips Industries is 1.95. Hence taking the average of past 8 quarters during the worst period, the average PE of the company turns out to be 6. With the expected PE of 6 the intrinsic value of the company turns out to be 49.5Rs, making (-29%) return with 40% tendered application, (-36%) return in 60% tendered application, and (-39%) return in 80% tendered application.

Now taking the current PE of the company (which is 11.3) considering that the company will atleast maintain its current PE, the expected share price of the company would be 90.8Rs and the return turns out to be 30% with 40% tendered application, 17% return with 60% tendered application and 12% return with 80% tendered application.

The highest PE of the company has remain 80, while median PE value of the company is 22, while the current Industry PE is 16. But considering with the current market scenario assuming the best case PE of 14 the share price turns out to be 115.5Rs and the return turns out to be 65% with 40% tendered application, 49% return with 43% tendered application and 12% return with 80% tendered application.

As 6 out of 9 different scenario turns out to be in good favour for buyback, this opportunity indicates a positive signal, however there are still certain risk associated for playing the buyback:

Points to Consider:

  • Tips Industries is a small cap company, with Market Cap of 127 crore (as on 24-03-2020), hence there is liquidity risk associated with the company.
  • Current market turmoil can decrease the price of the company and there are expectations of going to the worst case as well.
  • Promoter itself have tendered 12.6% of the total amount of the buyback.

Reference: here

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Tracking Buyback Case Study of Just Dial
Board has approved the Just Dial Buyback as on 30th April, 2020

The company started offering local search services in 1996 under the Justdial brand and is now the leading local search engine in India. Its official website was launched in 2007.

Justdial’s search service is available to users across multiple platforms, such as the internet, mobile Internet, over the telephone (voice), and text (SMS). Justdial’s search service bridges the gap between the users and businesses by helping users find relevant providers of products and services quickly and also helps the businesses to get listed in Justdial’s database to market their offerings.

The company has announced the Just Dial buyback on the basis of Tender Route. The Face Value of Shares is Rs 1.

Analyzing the Buyback Situation

The retail proportion in buybacks tends to be 15%. Therefore the available shares of buyback for the retailers would be 4,71,428 number of shares.

In the case of Just Dial, the retail shareholders can purchase for 576 shares, but considering the point that the share price can increase until buyback, one should purchase 500 shares which will almost cost around Rs.1,88,000 (considering the price of Rs.347).

Scenario Analysis

We have Considered 3 Scenarios where Expected application of buyback for Retail Investors is 50%, 70%, 90% respectively

In Scenario 1 where it is expected that 50% of shareholders apply in a special situation. The applied quantity of shares would be 50% * 18,92,273 (total retail shares) i.e. 9,46,136 (number of shares).

Expected Application = Total Retail Shares * Expected Application for Buyback

The tendered shares come out to be 4,71,429 i.e total shares in buyback {(31,42,857) * 15%}.
This gives us an Acceptance ratio of 2.01 for Scenario 1
For Scenario 2 Acceptance ratio is 2.81
For Scenario 3 Acceptance ratio is 3.61

Tender Acceptance Ratio = Expected Application for Buyback / Tender Reserve for Retailers

Net return from Buyback

The expected Successful Tender Application in buyback would be 500/3 i.e 183 number of shares. Now if we calculate the Net Profit from the Tender Application it will give us a profit of (700 – 376) * (249) = Rs. 87,944 which is Net Profit from Tender Application.

Net Profit from Tender Application = (Buyback price – CMP) * Expected Successful Tender Application.

The Net return on the tender application would be
50% in the case of Scenario 1
36% in the case of Scenario 2
28% in the case of Scenario 3

Our initial investment in Just dial buyback was Rs.1,88,000. With 50% applied ratio on buyback, the return we get from the buyback shares would be Rs.1,74,393 (249 * 700) i.e. Shares Tendered for Buyback * Buyback Price.

Now out of 500 shares, only 249 would be tendered and 251 shares would still be left in our portfolio. Therefore, after the return from applied buyback, the remaining value of shares would be Rs -893. The number is in negative because the total return from Tender Application is more than that of our initial investment.

Remaining Shares Value = Total Cash Inflow from Tender Application – Original Investment Amount.

Rationale Behind Conservative PE

Throwing light on the past buybacks of Just Dial ltd., it has been well noted that the market has never given the price of buyback value to the company, during and after the buyback process. While there has been an average difference of -35% of share value between the Buyback Price and the price of shares after the buyback.

Hence in our scenario our best case expected share price will turn out to be around 455 Rs per share.

While due to the pandemic and the fearful market dynamics the worst-case PE is expected to be 5 which reflects the price of 200Rs.


While looking all of the above 9 scenarios, 8 scenarios are in favour of the company. And out of the 8 scenarios minimum return would turn out to be 9% in case of 70% tender application with worst case PE of 5, and the maximum return would turn out to be 64% with 50% tender application and Best Case PE of 11. Buyback Process usually takes a quarter to complete hence the return would be more than 35% annually in worst case scenario.

While the maximum risk as per our conservative numbers will generate negative 3% return which has very odd chances compare to the safety in our assumption.

You can track other buyback situation here, and other finance blogs here

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Thanks for sharing the analysis.

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What is your source for saying Total Retail Shareholders = 17,20,248 ?
Have you taken that number from the company?

Also I would suggest look at last buyback of Just Dial - how many shares with retail increased between board announcement date & record date - assumption of 10% increase would look like quite a small number.
With those numbers in place your Scenario - 1 & 2 would start looking too bullish & probability of loss would start appearing :slight_smile: .

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1). Total Retail Shareholders are taken from March 2019 AR with the shareholders holding the number of shares in range of (0-5000) no of shares which is the maximum diversification available.
• Looking at the last 2 year the number of retail shareholders has been reduced (more than 35%).
• While number of retail shareholders are upto 5000 shares when the price of roughly around 600 to 700 rs. So we have even included those investor who has value of shares upto 35 lacs, who are now having the value of 17.5 lacs only. Hence the numbers are chosen to be conservative.
While looking at the Delivery rate of the company, the shares of Justdial is traded enough in the market, hence it is difficult to see 100% participation as you have to wait for around 3 months to participate. Hence there is high possibility that few retail shareholders will not be participating in the buyback being very short term investor.

• While around 50% of shares is in the hand of foreign portfolio investor who might not convert their holding in retailer category to participate.

• And if we assume that looking at the opportunity most of investors would diversify in different demat allocation to grab the opportunity, then as per my assumption we can go till shareholders holding in range of no of shares upto 20000 (at the price of 350) which is almost around 70 lac. And assuming atleast 50% of these investors want to participate in retail category then as shown in the below table there would be increase of around 20-22% of the shareholders.

Hence still going with increase in 20% that is assuming the range of shareholders holding upto 70 Lacs can enter in the retail shareholder category, still 8 out of 9 turns out to be in favour… (look at the net result below)

Disclaimer: Not promoting to invest in the opportunity. All these are based on certain assumption, and even in the very worst case scenario there are possibility of loss as well.

Recent scenarios of Buyback have been very favorable to the investors especially in the case of Tips Industries and Justdial. There is one another company which has come up with the buyback in the month of May. The company is Tanla Solution.

During such a market scenario it is common to see many companies coming up with the buyback. The company’s management who believes that their share price has been discounted by the market usually initiates the buyback in order to acquire the shares at the cheapest rate possible. Buyback is one of the tools to compensate the existing shareholders by delivering premium at the current market price.

But not all the buyback opportunity turns out to be lucrative. Let’s understand this from Tanla Solution Buyback.

Timeline of Tanla Solution Buyback

Yes…. The record date is after 3 days. We didn’t miss the opportunity but we didn’t find it favourable though.

Let’s find out why?

Overview of Tanla Solution

Tanla Solutions, founded in 1999, is engaged in providing integrated telecom infrastructure solutions and products. The company offers telecom products like SMSC, optimal routing solution, SS7 voice mail server, welcome roamer, high-density media servers, multiple MSISDN, CRBT, and prepaid roaming gateway; automatic vehicle location. This provides instantaneous location information of a vehicle. The Power AMR 101, an automated power reading device that provides instantaneous data of customer usage.

Analysing Tanla Solution Buyback

The buyback price by the company was decided to be Rs.81 per share. The buyback amount is Rs.154 crores. Now 15% of the amount Rs.23.1 crores will be set aside for the retailers.

Let’s understand the buyback opportunity……

We have tracked the opportunity from 24th April 2020 when the share price of the company was at around Rs.69.

Tanla Solution Buyback

At Rs.69, retail category of shareholders can purchase up to 2900 shares. However, considering the point that the share price can increase until the buyback, it is better to go for 2700 shares. With this, the total amount of investment would be Rs. 1,86,300.

Analyzing the shareholding pattern of March 2019, it has been noted that around 24% of the total shareholders are in retail category.

Taking a conservative approach, we have increased the total retail shareholding by 20%.

Considering 3 scenarios, where out of the total retailer shareholders
50% applies in Scenario 1, 70% in Scenario 2, and 90% in scenario 3. Multiplying the expected percentage application of Buyback with shares in hand of retailers will give the expected application of buyback.

While dividing the expected application with the total reserve for the retailers gives Tender Acceptance. These ratios turn out to be very disappointing.

In the case, if only 50% of the retail shares apply for the buyback, one has the tender acceptance of 17% only.

Hence with the buyback price of Rs.81, the Net Return turns out to be lower. As shown in the table one can generated returns from 1.5% to 3.03% from the tender application.

This gives us a very hard chance to earn money out of the play.

Buyback opportunity where retail shares are very high with respect to the percentage of Buyback, it would be difficult to make money in such scenarios.

The buyback was 12.5% of the total share capital, while there are around 23% of the retail shareholders.

While in Tanla Solution the premium at our investment price (Rs 69) is only around 17% (Buyback price of 81Rs).

“Hence the opportunity for making money reduces then when the premium on investment is low and retail shareholders are high.”

We found both the cases to be negative in in Tanla solution Buyback .

Understanding the Returns

The last 4 quarters EPS of the company was -7.77. Now assuming the worst-case scenario the share price of the company can fall till Rs.45. The share price has already seen such a downfall during the pandemic times where the share price has even fallen lower than Rs. 45. Now selling the remaining shares at 45 Rs will generate negative returns in all the 3 Scenario.

In the normal case scenario, where the price remains at Rs 60, again the return turns out to be negative. The return here would in range of -8 to -10%. While in the good case where the share price remains at Rs.75 per share after the buyback, the opportunity will generate only a 10% return.

However, 6 out of 9 opportunities were not in favor of buyback . Hence one should be cautious about investing in the opportunity.

Scenario Analysis

Through Scenario Analysis one can conclude that it would be difficult to grab the investment opportunity in Tanla Solution Buyback.

Low premium in the opportunity and higher participation of retailer shareholders has conflicted with our interest to invest in the opportunity.

Thus, the opportunity doesn’t turned out to be right fit for our investment.

Read other finance related article here.


Tracking Open Offer Deal of Healthcare Global Enterprise

Healthcare Globe announced the open offer on June 4, 2020

The mode of an offer is cash only. Aceso Company along with Aceso Investment Holdings in their capacity have announced an open offer acquisition of representing 26% of the Expanded Voting Share Capital.

The size of Open Offer is Rs 424 crores at the price of Rs 130 per share.

offer summary

Open Offer Evaluation

Assuming to tender 100 shares in the company, with the market price of Rs 120, the total investment value comes out to be around Rs 12,000.

open offer

Yeah, the spread between the Offer Price and the Current Market Price has been low (around 8%). Not quite disappointing…… But the promoter shareholding is only around 24%. Hence the Theoretical Application would turn to be lower.

acceptance ratio

With public shareholding of 76.1%, the Theoretical Acceptance Ratio would turn out to be 34.17%. However not all shareholders would apply in the Offer. Hence we would assume minimum possible acceptance ratio to be 45%.

Rationale behind the Possible Acceptance Ratio.

Focusing on the trend of the Shareholding pattern, one can find that most of the Institutional Shareholders (i.e. Mutual Funds, Foreign Portfolio Investors) are invested in the company since inception (i.e. from April 2016).

The price band of IPO was around Rs 205 to 218. The share price had already been traveled from all in way Rs 325 to recent All Time Low till Rs 70. During this ride, very few Institutional Shareholders have taken the exit.

This turns out to be the very least expectation of these institutional shareholders to take the exit from the open offer (as the spread is less than 10%).

While most of the retail shareholders are often oblivious of the open offer opportunity.

(Source: Screener)

Another important thing to note, recently (i.e. from April 2016) the volume in the company has risen a lot, while the delivery rate of the company has also seen to be increasing (currently at around 70%).

Continuing the Evaluation ….

Open Offer

Now, the profit in the case of Possible Acceptance Ratio (i.e. Acceptance Ratio of 45%) would turn out to be Rs 450. While the net profit would be Rs 342 in case of Theoretical Acceptance Ratio.

(Number of Shares * Acceptance Ratio * (Spread between Offer Price and CMP)

The remaining shares in such case would be 55 in Possible Acceptance Ratio, and 66 in Theoretical Acceptance Ratio.

Hence in such a case, the Effective Cost Price of the Remaining share would be Rs 112 in Possible Acceptance Ratio, and Rs 115 in Theoretical Acceptance Ratio.

Note if the price after the open offer turns out to be lower than the Effective Cost Price, then we would make a loss in the deal.

Expected Return

expected return

Looking at the fundamentals of the company, we didn’t find the company to provide returns in the shorter time frame. Hence being conservative even if one assumes to sell the remaining shares at the cost price that is Rs 120 per share the returns would still turn out to be lower.

Scenario Analysis

Open Offer

Now looking at scenario analysis it is often noted that the highest possible return in case of price going till Rs 130 is 8%. Now considering the deal will take the time of 4 months, the annual return would turn out to be 25%. But the possibility of such a case is lower than 20%.

(Note: We have not carried detailed fundamental analysis, however if one thinks the price would touch higher than Rs 130 in a shorter time frame, any which way the open offer will not turn out to be a good deal. As one can sell the price higher than Rs 130 in the market rather than Offer Deal).

Thus, we concluded this to be not so favorable (Open) Offer Deal.
Disclaimer: We are not an investment advisor. The article is just for informational purpose. Kindly do your own analysis before investing…

You can read the full article here

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Dhanuka Agritech has recently announced buyback of its shares of 14.27% of the total paid up Equity Share Capital, not exceeding maximum price of Rs 1,000. Company has announced the buyback amounting 100 crores, and proposed to bought back 10 Lacs shares.

Promoter and Promoter Group has already mentioned to be participating the buyback.

Board has approved the buyback deal on 22 July, 2020.

Let’s have look at the Shareholding Pattern of the company.


Company has only announced 2% buyback of total number of shares.

Dhanuka Agritech Buyback: Deal Structure

Let’s understand why playing only for buyback would not be as benefit able as one think.

Dhanuka Agritech Buyback

Assuming 3 scenario with for the possible acceptance ratio we have assumed
Scenario 1 with expected application of 50%;
Scenario 2 with expected application of 70%,
and Scenario 3 with expected application of 90%.

Now with all these expected application none of the deal has the tender acceptance of more than 10%. This means that there very low chances of getting maximum shares to be tendered for the buyback.

Still assuming to play for the buyback, with the assumption in scenario number of shares still left in our demat is
200 shares in case of Scenario 1,
206 shares in case of Scenario 2, and
209 shares in case of Scenario 3.

While with the inflow from the shares applied in the buyback, average price of the remaining shares in our demat account would be
Rs 850 in case of Scenario 1,
Rs 855 in case of Scenario 2,
and Rs 857 in case of Scenario 3.

These prices are almost near to our current investing price. Hence only playing the buyback deal won’t be turn as lucrative as one think.

Regarding your post on TANLA: I am quite confused reading this now. The stock is hitting the 200 mark soon and your analysis implies that 81 was not a good price to enter?

Thanks for marking the observation. Truly speaking I didn’t expected such high gains from Tanla solution, and I am baffled with such pricing. However, this was my first learning of company going so high after the buyback and I committed error in my analysis.
Learning from the process, and again thanks for mentioning

It is not great if companies do buyback at high valuation

They should have done earlier

Maybe they are doing buyback to save tax by not paying dividend

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yeah but buyback was done at price of 85 hence company still have done the buyback at cheaper price. As an investor one can be cautious

Please don’t get me wrong :slight_smile:
Tanla stock goes up by 5% exactly, every day. So, that has nothing to do with the logic you have applied.
Point is: some stocks defy all logic (e.g. TSLA)

Don’t want to protect myself through logic.
I completely agree, I was wrong on my analysis on Tanla Solution, however I don’t feel right to tweak my framework on special situation due to Tanla. I feel these are 10% companies which work against Special Situation.

Recently on 2nd November 2020, NTPC came up with buyback at a price of Rs 115. On 3rd of November 2020, the board announced the record date to be 13th November 2020, leading to confirmation of early completion of buyback.

Overview of NTPC Buyback Case study

NTPC Buyback Case Study

The buyback amount of NTPC turned out to be Rs 2,275 crores and number of shares for buyback is around 19.8 crores.

Out of this 15% is allocated to retail shareholder. To be in retail category one can purchase maximum of 2200 numbers of shares (considering the increase in share price).

NTPC Buyback Case Study

With this our investment amount would turn out to be Rs 1,89,200.

With total 19.8 crores shares, numbers of shares which comes under retail category, i.e shares with less than 2 lacks of NTPC in their portfolio comes out to be around 14.5 crores.

Assuming there would be 10% increase in the retail shareholders, as this number has been taken from the Annual Report of 2020, on the basis of maximum diversification which was available.

NTPC Buyback Case Study

Let’s dive in to the scenario approach of what could be the acceptance ratio. Current theoretical acceptance ratio of NTPC buyback case study is around 19%. But 100% tender application have been never seen in the market.

With 3 difference scenario of 50%, 70% and 90% of expected buyback application, the tender acceptance ratio turns out to be 37%, 26% and 21% respectively.

Tender Acceptance ratio is calculated with Expected Application of Buyback Shares / Number of Shares for Retail Category.

NTPC Buyback Case Study

With these scenario, we would generate following cash flow from the company in terms of buyback. With the inflow the net value of the shares would then be turn out to be;
69 Rs in case of 50% application;
76 Rs in case of 70% application and;
78 Rs in case of 90% application.

Sales price of the remaining shares.

On the fundamental basis NTPC has pretty much hold on its sales which has been growing constantly at the rate of 9% CAGR since the past 10 year. While last 3 year sales CAGR is around 3%. Operating Profit Margin has been consistent over the period of 10 years in the range of 22 to 31%.

Net Profit Margins is declining since 2009 from 18% to around 11% in 2020, despite of Operating Margin being increase from 25% in 2009 to 31% in 2020.

This main constituents to this includes increase in interest expense and depreciation because of increase in borrowing and decreasing asset turnover respectively.

Source: Screener

However, market is consistently bending the share price of NTPC. Being a government company the share price has been pretty downward.

We don’t want to be the one to against the trend. While technicals can help here depicting the proper support price of the company.

Technical Support

Post COVID, the share price made a bottom of around Rs 75 making another down swing at Rs 78. Breaking the Triangle channel can be alert price and below Rs 75 can be caution part for us.

This gives us the worst price for our strategy to be Rs 75. Anything below this could be more worst for our buyback framework.

Source: Tradeview

The normal case price stand at around Rs 80 on the basis of the trend line of two bottom. While the best case price can be the top of triangle, which Rs 90. However, let’s consider the best case scenario to be around Rs 85.

Assuming the above discussed scenario prices for the selling price of the remaining shares we get the following returns from the NTPC buyback case study.

Out of the 9 possible scenario, we can make loss in case when the expected application of buyback remains at 80% and the sale price of the remaining share remains at Rs 75.

While 2 scenario out of 9 scenario will give positive returns but not more than our required rate of return from the market.

Rest of the 6 scenario remains profitable generating handsome return for investors like us.

This suggest a good deal to look out for, and on the basis of above scenario it seems good to allocate some of the portfolio in the market.


Indian Toner announced for the buyback on 4th November 2020, and just on the last day of 2020 (31st December), company did announced the record date for the buyback on January 15 2021.

This make the investment timeframe a little of less than 1-1.5 month.

Glimpse on Indian Toner & Developer Buyback

The buyback price announced by the company is Rs 160. The company is total buyback back shares worth 37 crores. In order to participate in the retail category one can go for maximum 1400 number of shares. This make investment of Rs 1,86,200.

Total number of retail shareholders in Indian Toner & Developers Ltd is more than 26 Lac shares. Assuming 10% increase in retail shares, we get more number of retail shares of more than 28 Lac shares.

Possible Acceptance Ratio
As we know till know, 100% of the shareholders never apply for the buyback, we again have assumed 3 scenario for the buyback. Looking at the below image one can see the possible acceptance ratio.

24% acceptance ratio in case of 50% expected application;
17% acceptance ratio in case of 70% expected application;
13% acceptance ratio in case of 90% expected application;


With above Net Profit from the Tender Application, lets calculate the average price of all the remaining shares in hand.

Deducting the Net Profit from Tender Application from the investment amount and dividing with the original investment we get following Average Price for the remaining shares;

124 Rs in case of 50% of Tender Application;
Rs 127 in case of 70% of Tender Application;
Rs 129 in case of 50% of Tender Application;

Calculation of Net Return from the Buyback

The last important thing in the deal remains the selling price of the remaining shares. Assuming 3 different case for the selling for the remaining shares, we get Rs 125 in case of worst case price, Rs 135 in base case price and Rs 150 in good case price expectation.

The price we came up is through the technical level. In worst cast one has to completely exit the shares if the price went below Rs 120.

However, what makes interesting in this buyback is that, this deal is more favourable for promoter and HNI shareholders. Let’s understand why?

Buyback Favorable for HNI / Promoter

The shareholder we have assumed for the retail category includes the No. of Equity Shares held less than 2000 shares. The buyback for retail category only allots to around 15%.

Buyback represents up to 17.56 % of the total number of Equity Shares of the paid-up Equity Share Capital of the Company. This makes buyback of 2.634% for the category while buyback for non-retail category is 15%.

Percentage of retail shareholder category in Indian Toner & Developers Ltd is around 20%, while percentage of non-retail shareholder category is around 80%. Simply getting the allocation of buyback with retail vs non retail category, maths simplify that buyback remains favourable for non-retail category.

However the deal still remains favourable for the retail shareholding as well. We had already invested in the buyback at level mentioned of Rs 133.

About Indian Toner & Developers Ltd
Indian Toners & Developers is in the business of manufacturing of Toners.

Company manufactures Pulverised Toners and Chemically Produced Toners which is used in Laser Printer, Copiers, Printers, Color Laser Printers, MFP etc.

The products of the company is under the brand name of Supremo, Formlua, ITDL Color Premium. Company is the largest Compatible Toner Powder Manufacturer in India. The manufacturing capacity of the company has increased from 350 MTPA in 1992 to 3,600 MTPA in India.

The sales of the company has grown at a CAGR of around less than 10% in last 10 years.

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Security and Intelligence Service (SIS) recently announced with the buyback on 10th February.

Buyback approval date: 15th February, 2020.
Buyback amount: 100 crores
Buyback Price: Rs 550
Buyback spread: ~28%.

Looking at the latest AR shareholding of the company. number of shareholders in retailer category are are around 7,72,739 number of shares.

Considering to be increase in 20% of the retail shareholders post the FY20 AR, total number of retail shareholders comes out to be 9,27,287

Considering the above scenario, the Theoretical acceptance ratio comes out to be ~30% for the retail category.

As we know not every shareholder apply for buyback again considering 3 scenario for potential applicant of buyback, following is the application we get from the buyback

Possible Acceptance Ratio:
In case of 50% application, acceptance ratio turns out to be 59%
In case of 70%, it turns out to be ~42%.
In case of 90%, it turns out to be ~33%.

With such acceptance ratio, our average price of the remaining shares turns out to be much lower for better support.
Rs 259 in case of 50% buyback
Rs 343 in case of 70% buyback
Rs 372 in case of 90% buyback

Post Buyback Analysis:
Assuming 3 scenario for post buyback selling price of SIS, we came to conclusion for following price.
Worst case price of Rs 350 has only 1 scenario which will yield negative returns in this buyback play.

Rest all generate positive yield on buyback

8 out of 9 scenario results positive return on buyback, generating as high as 23% return and lower as just -3% return from buyback.

Let’s dive in technical analysis for understanding how we came up with the post buyback price of SIS.

For basic fundamental, refer previous tweet.

Share price in past has been tested multiple time times at the support level of Rs 350 which is least likely to be broken. Closing above 480 can be a good breakout.

Even in median case of Rs 450 there is good returns to be accumulated with specified time frame.

Best case price can be be higher than Rs 500 also, however for the sake of selling of shares exact after buyback we have consider Rs 500.

Our rationale for this buyback is good, and in in worst case if the price drops below Rs 350 we may exit as well.


Quick Heal Technologies Buyback Update:

Buyback Price: Rs 245
Buyback Amount: Rs 155 cr
Buyback Shares Qty: 63,26,530
CMP: 194
Buyback Spread: 26%
Buyback approval Date: 10th March

In order to participate in retail category one can go for max 1,000 number of share for participating in Quick Heal Buyback.

Understanding the Deal:
Buyback represents 9.85% of the total paid up equity share capital of the Company.

Shareholding Distribution AR 2020:

  • Looking at the shareholding distribution to judge the number of retail shareholders once can go for shareholding within nominal value of 1-5000.

  • Number of retail share thus includes 43,01,102 number of share.

However in past 2 quarter Sequioa Capital India have exited 2% of their holding, which increased the retail shareholders. Assuming 30% increase in shareholding, the theoretical acceptance ratio in such scenario turns out to be 17%.

Assuming 3 different scenario for application of buyback, expected tender acceptance would turn out to be

34% in case of 50% expected application
24% in case of 70% expected application
19% in case of 90% expected application

Post Buyback Analysis:

Assuming 3 different scenario for selling the share with worst case price of Rs 180, base case price of Rs 200 and good case price of Rs 220 cr, 7 out of 9 scenario turns of to be in favor of buyback.

Rationale behind Price:

Level of Rs 180 has been tested multiple times, which is likely to be broken.
In worst case price should not fall below these level atleast for month.

1). Promoter is participating in the buyback which makes deal less lucrative in FII or QIP category.
2). Promoter participating is also a negative aspect of holding the share post buyback.
3). Below level of 180 may again text the channel, hence strict sl post buyback.


@Vishal_Jajoo Thx. Any minimum qtn required for buyback participation? What is cut off date? Ref SIS. I believe SIS seems better for short term participation than Quick H, is my understanding is correct?

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For retail participation less than 2 lac should be the amount. Minimum qty atleast have 5-10K.

Record date is yet not announced being a month

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