Cochin Shipyard Limited Buyback offer 2018

(i) Cochin Shipyard is the largest public sector shipyard in India in terms of dock capacity, according to CRISIL Report. The company caters to clients engaged in the defence sector in India and clients engaged in the commercial sector worldwide. In addition to shipbuilding and ship repair, it also offers marine engineering training. As of January 31, 2017, Cochin Shipyard has two docks – dock number one, primarily used for ship repair (“Ship Repair Dock”) and dock number two, primarily used for shipbuilding (“Shipbuilding Dock”). The Ship Repair Dock is one of the largest in India and enables it to accommodate vessels with a maximum capacity of 125,000 DWT (Dead Weight Tonnage). The Shipbuilding Dock can accommodate vessels with a maximum capacity of 110,000 DWT.

(ii) Cochin Shipyard is in the process of constructing a new dock, a ‘stepped’ dry dock (“Dry Dock”). This stepped dock will enable longer vessels to fill the length of the dock and wider, shorter vessels and rigs to be built or repaired at the wider part. The company is also in the process of setting up an International Ship Repair Facility (“ISRF”), which includes setting up a shiplift and transfer system.

(iii) In the last two decades, Cochin Shipyard has built and delivered vessels across broad classifications including bulk carriers, tankers, Platform Supply Vessels (“PSVs”), Anchor Handling Tug Supply vessels (“AHTSs”), barges, bollard pull tugs, passenger vessels and Fast Patrol Vessels (“FPVs”). The company is currently building India’s first Indigenous Aircraft Carrier (“IAC”) for the Indian Navy. It has also grown its ship repair operations and is the only commercial shipyard to have undertaken repair work of Indian Navy’s aircraft carriers, the INS Viraat and INS Vikramaditya.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Oct 31 2018
Buyback Offer Amount: ₹ 200 Cr
Date of Board Meeting approving the proposal: Oct 16 2018
Date of Public Announcement: Oct 16 2018
Buyback Offer Size: 6.41%
Buyback Number of Shares: 43,95,610
FV: 10
Buyback Price: ₹ 455 Per Equity Share

Details of Buyback:

The Board of Directors of the Company Approved the proposal to Buyback of not exceeding 43,95,610 Equity shares at a price of Rs.455 (Rupees Four Hundred and Fifty-Five only) per equity share (the “Buyback Offer Price”) of face value Rs.10 each, payable in cash for an aggregate consideration not exceeding Rs.200 crores.

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of Cochin Shipyard Limited Buyback offer 2018 in demat or physical form as on the record date [31.10.2018] 2. Once you have shares in demat, you can participate in the buyback process which is opening from [Not Announced Yet] by selling your shares through your broker on NSE or BSE. 3. Then on [Not Announced Yet], 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 450 Shares at CMP of Rs.400 [180,000/400=450)
Acceptance Ratio 33% 50% 75% 100%
(i) Amount Invested in Buyback 1,80,000 1,80,000 1,80,000 1,80,000
(ii) No. of Shares buyback 148 225 337 450
(iii) BuyBack Profit 8140 12375 18535 24750
(iv) Profit(%) 4.5% 6.87% 10.29% 13.75%

Recommendation:

Review and Recommendation of Cochin Shipyard Limited Buyback offer 2018 by InvestorZone team is: 3/10 Fair: 1-5 Good:5-7 Excellent: 7-10

Company Contact Details:

Cochin Shipyard Limited Perumanoor PO, Kochi, Kerala, India-682015 website: www.cochinshipyard.com

    if i am sel today 31-10-18 cochi ship yard share then i am eligible for buy back…bu

    IS THERE ANY RULES ANY COMPANY SHOULD FINISH BUY BACK IN HOW MANY DAYS AFTER RECORD DATE?

      Yes. Company needs to close Buyback after 6 Months of the Record Date. Last Year Wipro had the Window open almost 4 months after the Record Date.

    BHEL approves buyback of up to 189.3 mln shares at 86 rupees/shr.
    5% of capital ; 20% premium to CMP

    No need to pay any special attention to this company just because they have come up with a Buyback.

    The Cochin Shipyard is fundamentally a good company. However, we have a history of so many stocks not performing beacuse of PSU tag and this one is no exception. The share Is trading below its IPO price which speaks about the confidence of the market in this stock.

    One Quick Solution that will work in Every Buyback.

    The biggest problem in Buybacks is to find out Acceptance Ratio.

    However, as a general check, we can always find the Rough Acceptance Ratio in any buyback.

    Let us suppose the No. of Shares Reserved for Retail Investors are 10K and they can buy maximum 2000 Shares to be eligible under Retail for buyback.

    Now to find out the Rough Acceptance Ratio we have to go to Shareholding Pattern of the latest quarter and have to figure out no. of shares up to 2 lakh Share Capital.

    2 Lakh Share Capital means = No. of Shares*Face Value
    No. of Shares= 2 Lakh/10= 20000[ Considering FV=10]

    So what does that 20000 means????

    It means there are “n” numbers of Investors who have for ex. 12, 49, 6660, 5555, 10000, 15000 etc shares in their account and whatever the number comes after adding all is suppose 100K.

    So what we understood till now??

    No. of Shares Reserved for Retail in buyback = 10K
    No. of Shares Retail investor can buy to be elgibile= 2000
    No. of Investors who are having shares up to 20000= 100K

    Now, this 20k figure will cover almost all the retail investors who are eligible for buyback.

    Acceptance Ratio would be =10K/100K= 10%.

      Technically you are incorrect. In shareholding pattern the holders holding Rs 2lacs capital is nominal capital however for the purpose of buyback the retail share holder having Rs 2lacs capital means 2 Lacs value at market rate on record date.

        It is a very good approximation. More so because most of the retailers are allottes of IPO .

    Not much upside plus the size of the buyback is very small.

    COCHIN SHIPYARD BUYBACK

    No. Of Shares= 43,95,610

    Price= Rs. 455

    Total Amount =200 Cr

    A Retail investor can buy 440 Shares( 2lakh/455) to participate in the buyback.

    As per Mar 18, the number of investors having shares between 1-500 are close to ~73 Lakh.

    The No. of Shares reserved for Retail Investor in Cochin Buyback is close ~6.60 Lakh.

    As per the above figure, the Acceptance Ratio would be less than 9%