Ajanta Pharma Buyback 2019

(i) Ajanta Pharma is a specialty pharmaceutical company engaged in the development, manufacturing, and marketing of quality finished dosages. Committed to ‘Serve Health Care Needs Worldwide’, they produce a comprehensive range of specialty products targeting different therapeutic segments for the treatment of patients, customized to each market.

(ii) Their business includes Branded Generics in emerging markets of Asia and Africa, Generics in the developed markets of USA and Institution sales.

(iii) The branded generics business is spread in India and more than 30 emerging countries across Africa, CIS, the Middle East and South East Asia. In India, they have a presence in high growth specialty segments of cardiology, dermatology, ophthalmology and pain management where they have been able to provide consistently innovative products, many being 1st to the market, for patient convenience and compliance. 

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Feb 12 2019
Buyback Opening Date: Feb 28 2019
Buyback Closing Date: Mar 14 2019
Date of Board Meeting approving the proposal: Jan 30 2019
Date of Public Announcement: Jan 30 2019
Buyback Offer Size: 5.22%
Buyback Number of Shares: 7,69,230
FV: 2
Buyback Price: ₹ 1300 Per Equity Share

Details of Buyback:

Approved the proposal to buyback of not exceeding 7,69,230  equity shares at a price of Rs. 1,300/-  per equity share (the "Buy Back Offer Price") pay in cash for an aggregate consideration not exceeding Rs. 100 crores (Rupees One Hundred crores only) (the "Buyback Offer Size") being 5.22% of the aggregate of the fully paid-up equity share capital and free reserves as per the audited standalone financial statements and 4.96% and audited consolidated financial statements of the Company for the financial year ended 31st March 2018 as per Tender Route

Salient financial parameters:

Year Revenue(Cr) Expense(cr) OPM% PAT(Cr) NPM(%) EPS
2016 1770 1211 34% 415 23% 47
2017 2007 1358 35% 506 25% 58
2018 2149 1527 31.70% 468 22% 53

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of Ajanta Pharma Buyback 2019 in demat or physical form as on the record date [12.02.2019 ]. 2. Once you have shares in demat, you can participate in the buyback process which is opening from [ 28.02.2019 to 14.03.2019 ] by selling your shares through your broker on NSE or BSE. 3. Then on [22.03.2019], the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 153 Shares at CMP of Rs. 1089 [2,00,000/1300=153)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,67,538 1,67,538 1,67,538 1,67,538
No. of Shares buyback 50 76 114 153
BuyBack Profit 10550 16036 24054 32283
Profit 6% 10% 14% 19%

Recommendation:

Review and Recommendation of Ajanta Pharma Buyback 2019 by IZ team is: 2/10 Fair: 1-5 Good:5-7 Excellent: 7-10 [ Buyback size of 100 Cr is very small. Acceptance Ratio would be around 10%. The Quarterly results are very poor.]

    I request everyone in this forum to look at the price movement of Ajanta Pharma between 06.02.2019 (when record date was announced) and 11.02.2019( Ex. Date of Record date) to know how game has to be played in most buyback.

    Final Analysis of Ajanta Pharma Technologies 2019 ( Return Analysis)

    1. Buyback Announcement date: 30.01.2019—– Share Price was 1089

    2. 153 Shares bought at Rs. 1089 means an investment of 1,67,538.

    3. Retail Acceptance Ratio was 20%. i.e. out of 153 shares, 30 shares have been buyback by the company. Profit on Accepted Shares= 6330

    4. The 123 Unaccepted shares were given back on 22.03.2019. The price on 22.03.2019 is 1007, so if you sell 123 shares in 1007, then it is a loss of 10086.

    5. Overall we can say a loss of 3756 on Ajanta Pharma Buyback.

    OR

    1. Draft letter issued: 06.02.2019—– Share Price was 925

    2. 153 Shares bought at Rs. 925 means an investment of 1,41,525.

    3. Retail Acceptance Ratio was 20%. i.e. out of 153 shares, 30 shares have been buyback by the company. Profit on Accepted Shares= 11250

    4. The 123 Unaccepted shares were given back on 22.03.2019. The price of 22.03.2019 is 1007, so if you sell 123 shares in 1007, then it is a profit of 10600.

    5. Overall we can say a profit of 21850 on Ajanta Pharma Buyback.

    See the above two strategies, had you bought after the announcement of Record date you still would have made a very good profit from Ajanta Buyback. So it is the game of strategy.

      Very good analysis. But no strategy works permanently in market. Apply this on HEG and MPHASIS and there are only losses at each front.

        In HEG, the record date was announced on 04.02.2019, at that time share price was 2368. Had you bought on 04.02.2019 and sold all shares on Ex. Record date( 08.02.2019) when the price was 2375 and could have waited for a letter of offer to come to buy only that amount of quantity which you were entitled to, you would have made a profit of 3132 per share on your entitlement.

          In Mphasis, I agree it would have a loss but the loss was not that severe had you bought near the record date.

          In both HEG and MPHASIS, price at record date went way below the price at announcement. Anyway, your strategy can be traded cautiously.

        The strategy only works if price moves upward

        Now if Price is moving upward investor would thinkntaht why exit when share is good and it is rising

        Whenever a draft letter is issued which contain the Record date is always informed to SEBI and Exchanges by the company.

      Mw
      From what I can understand and do forgive me if there is an obvious mistake as I am still learning the trade

      It’s about price at which we buy
      Now as the price was lower afterwards(925) therefore the profit

      If price had moved upwards then loss

      Please ask in the Quick Heal Buyback section.

    Looking at number of shareholders applied i.e. 17338, AR will be about 20%

      Actually data is directly feed from BSE wesbite. BSE has not updated the data since 08.03.2019. It will be rectified bro.

    Is there any official update regarding of acceptance ratio in reserved category ? Whether expected accpetance ratio same as entitlement ratio or there is increase in that ratio?????

      There is no official declaration of Acceptance ratio. Company only describes no of shares tendered by retail / general investors & %age of response against reserved for category.

      From total response one can not calculate acceptance ratio for every individual.

      Acceptance ratio may vary investor by investor depending on no of shares (including additional) he tendered in buyback, exception only in case where shares tendered is less than reserved i.e. 100% acceptance.

    You can see how many shareholders has applied. As on 10th Feb’19 8761 shareholders has applied. This is approx 20% of total shareholders.

    You can see how many shareholders has applied. As on 10th Feb’19 8761 shareholders has applied. This is approx 20% of total shareholders.

    Is there update any regarding acceptance ratio??? Whthere expected accpetance ratio same as entitlement ratio or there is incrse in that raio?????
    I’m suffering from huge losses due to this stock….

    Sir plz can u tell me how much shareholder is in retail category in Ajanta Pharma?

      there are 44,539 Small Shareholders with aggregate shareholding of 14,88,667 Shares as on record date

        Is there is any way to knw how much shares in reserved category for small shareholder has been subscribed???
        Thanks

        That’s not possible. However, you can see the data of Individuals who have applied from bse. Individuals consist of shareholders holding shares worth less than and more than 2lakh.

    Sir,
    I have 298 share of ajanta pharm on dp.from and before 12 feb. 19 .How can I participet for buy back and how many qty.accepted.

      You are categorised under general category as ur holding above 2 lacs on record date.
      Entitlement for general category is 3 Equity Shares out of every 397 shares i.e. 0.76%
      2 shares confirmed accepted, additional depend on total shares tendered in general category.

      You can participate in buyback through buyback window provided in demat trading ac, if not provided buyback window then contact your broker.

    I had 100 shares in record date and my entitlement for buyback is 7 shares. Suppose acceptance ratio is 20% does it mean if I tender 20 or 100 the buyback will be for 20 shares in both cases ?

      your 7 shares confirmly accepted
      additional shares acceptance depend on total shares tendered by retailers
      additional shares ratio again calculated for short shares of retail reserved shares , suppose additional ratio is 10% then
      if you tender 100 shares means 93 additional then 10% of 93 === 9 shares
      if you tender 20 shares means 13 additional then 10% of 13 === 1 shares

    If I have only 10 shares and if i need minimum 15 shares for buyback, can i buy the remaining 5 shares from Open market now and be eligible/tender 15 shares for the buyback?

      No. To be eligible for buyback you should have shares in your demat account on the Record date.

        I have 10 shares as on record date, but i received e-mail stating that it will not be considered since acceptance ratio is for 13 shares. Now, if i buy 3 additional shares, can i tender all the 13 shares?

      Even though your entitlement is 0, you can tender 10 shares, there may be a possibility of acceptance of atleast 1 share if all entitled shares not tendered by retailers.

    Ajanta Pharma-Record Date being Tuesday, February 12, 2019
    Entitlement for Buy-back Offer in terms of no. of Equity Shares
    111 – Acceptance 8 Shares !!!
    7.2%
    Not good. Isn’t it?
    Considering investment @900/- ((100,000/-) for 111 shares absolute return is 3.2% for about 60 days…
    Just for knowledge…

      It is 13.5% return
      If bought @ 900
      Current value around 1000, if balance 103 shares sold @ 1000 — 103000
      8 shares buyback @ 1300 —- 10400
      103000 + 10400 – 99900 = 13500

        Thank you indeed. Guess will sell part now and convert part into medium term investment. 13.5% notional returns in 2 months is fine. Or maybe sell all now and invest after a week or few, expecting price to go down around or below 900/-

    Entitlement 1 Equity Shares for Every 13 shares.

    Entitlement= 7.69%.

      The size of the buyback is small. The price has already fallen a lot. So please avoid buyback.

    ER Calculation

    No. of Shares reserved for Retail Category- 1,15,384 Shares

    Shares up to 2 lacs as per Dec 2018 Pattern- 64,03,433 Shares

    ER-based on this 2%

    Q3 FY 2019 performance highlights (compared to Q3 FY 2018)

     Income from operations at Rs. 485 cr. against Rs. 587 cr., down 17%.
     EBITDA at Rs. 107 cr. against Rs. 198 cr., down 46%; EBITDA at 22% of revenue.
     Profit after tax at Rs. 67 cr., against Rs. 147 cr., down 55%; PAT at 14% of revenue.

    Quarterly results are very poor in every parameter. The company may have done buyback to arrest in price.

    Share will definitely open with gap down for sure.

    Buyback Size is less than 1% of total equity.
    Small Shareholders potion approx 1 lakh shares only

      Thanks for the number, though BSE/NSE website is not showing any update on BB.

      Is it tender route or open market. Also what is the size of the BB coz the results are bad??

        BSE now has the announcement. It is for 100 Crores in tender route. Not cheerful enough on size considering the market cap of the company is 9000 Crores

    Buyback Announcement

    This is with reference to our letter dated 21st January 2019, informing you about the Board meeting of the Company scheduled to be held on Wednesday, 30th January 2019 (“Board Meeting”), to consider, inter alia the unaudited financial results for the third quarter ended 31st December 2018.

    Pursuant to Regulation 29(1)(b) of LODR Regulations, we hereby inform you that, at the aforesaid Board Meeting, the Board of Directors will also consider a proposal for buy-back of the Equity Shares of the Company including matters related & incidental thereto (“Buyback”) and any other matter as the Board of Directors of the Company may decide during the course of the meeting.