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.