Granules India BuyBack Record Date, price, and Illustration

Granules India BuyBack Price

Granules India Ltd. is a vertically integrated pharmaceutical company, headquartered in Hyderabad, India. Manufacturer of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs), and Finished Dosages (FDs), distributed to quality-conscious customers in both regulated and semi-regulated markets. In this article, we will read about Granules India BuyBack Record Date price and Illustration.

Granules India BuyBack Offer Details:

Buyback Type:Tender Offer
Buyback Record Date:Mar 20 2020
Buyback Offer Amount:₹ 250 Crores
Date of Board Meeting approving the proposal:Jan 21 2020
Date of Public Announcement:Jan 21 2020
Buyback Offer Size:4.92%
Buyback Number of Shares:1,25,00,000
Price Type:Tender Offer
Buyback Price:₹ 200 Per Equity Share

Granules India BuyBack Illustration for Retail Investors

VIEW: Given the large retail holding and sharp run-up in the stock price, we believe that it would not yield significant returns for retail investors, from a buyback perspective

Shareholding distribution as per FY2019 annual report (as on March 31, 2019)

No. of shares % of shareholding
Upto 5000 14.5%
5001-20000 5.5%
20001-100000 6.2%
100001- above 73.8%
Total 100.00%

Source: Company Annual Report

Given the wide distribution of shareholding, we estimate acceptance ratio for small investors could be around 5-20%, which would not yield significant returns, from a buyback perspective

  • The retail holding in Granules (up to 5000 shares) was 14.5% (as on March 31, 2019)
  • 15% reservation for the buyback of 4.9 % of paid-up equity implies at least 0.73% of paid-up equity will be bought from retail investors (as on March 31, 2019)
  • Acceptance ratio =0.735/14.5=5% (as on March 31, 2019)

Scenario Analysis: (assumes one is able to exit the returned shares at CMP of INR 170, ex-buyback)

Amount invested Acceptance Profit Absolute return
169000 5% 1,550 0.9%
169000 10% 3,100 1.8%
169000 20% 6,200 3.7%

Key Risks:

  • Additional retail shareholders buy the stock before the record date leading to lower acceptance ratio

The current market price (assumed for calculation of profits) drops before one is able to exit post buyback

How to Participate in buyback?

  1. Firstly to be eligible for the buyback the investor should have shares of Granules India Limited Buyback 2020 in Demat or physical form as on record date i.e. on 20.03.2020.
  2. Once you have shares in Demat, you can participate in the buyback process which is opening from [ Not Announced ] by selling your shares through your broker on NSE or BSE.
  3. Then on [ Not Announced ], the settlement will be done for accepted shares and unaccepted shares will be returned to your Demat account

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