HEG LIMITED BUYBACK 2018

HEG Ltd, a premier company of the LNJ Bhilwara group, is today India’s leading graphite electrode manufacturer. It has one of the largest integrated Graphite Electrode plants in the world, processing sophisticated UHP (Ultra High Power) Electrodes.

The company exports over 70% of its production to more than 30 countries of the world.

The position the company enjoys today in India and abroad is largely due to its commitment to constant up-gradation of its product quality to match international standards and to meet new challenges to win and excel in all situations.

In Graphite, their focus is on UHP grade electrodes, and they have expanded their product range and established the same on some of the toughest furnaces for their customers. Today, they have years of experience in supplying quality UHP grade electrodes all over the world.

The encouragement from their customers has led them to increase production capacity and become a significant global producer of quality UHP grade electrodes for EAF application. The ability to source the best raw material from sources worldwide and the skills of human resources has been the key to the growth of the company.

To maintain the competitiveness, they have set up a Captive Power Plant totaling more than 77 MW.

As a responsible graphite electrode manufacturer, they continue to invest in technology, development of new products environment and in the human resources.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Feb 09 2019
Buyback Offer Amount: ₹ 750 Cr
Date of Board Meeting approving the proposal: Nov 26 2018
Date of Public Announcement: Nov 26 2018
Buyback Offer Size: 3.41%
Buyback Number of Shares: 13,63,636
FV: 10
Buyback Price: ₹ 5500 Per Equity Share

Details of Buyback:

The Board of Directors of the Company at its meeting held on 26.11.2018 at 12:00 Noon and concluded at 2.30 P.M. has interalia approved a proposal to buy back up to 13,63,636 Equity Shares of the Company, being 3.41 % of the total paid up equity share capital of the Company, for an aggregate amount not exceeding Rs.750 Crores at Rs. 5,500 under the Tender offer route using the stock exchange mechanism.

Salient financial parameters:

Year Revenue(Cr) PAT(Cr) EBITDA Margins Profit Margins EPS
FY16 870 -7.55 16.28% -0.87% -1.92
FY17 859 -50.05 10.40% -5.83% -12.52
FY18 2,748 1081 62.00% 39.34% 270
6MFY19 3371 1658 76% 49.1% 414
Note- The company's fortunes change when China shut down Graphite Electrodes manufacturing in their country due to pollution issues. The Graphite Electrodes price skyrocketed and HEG Limited has immensely benefited. The Company has already made a profit of close to 1600 Cr in the first 2 Qtrs of FY19 which is 3x as compared to Annualized FY18, shows the demand for the electrodes. The company will easily clock the EPS of close to 700 in the year FY19. On that basis the company currently trading at a mouth-watering valuation of P/E of 6. The company is debt free on the basis of long-term borrowings.

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of HEG Limited Buyback offer 2018 in demat or physical form as on the record date [09.02.2019] 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 36 Shares at CMP of Rs. 4358 [2,00,000/5500=36)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,56,888 1,56,888 1,56,888 1,56,888
No. of Shares buyback 12 18 27 36
BuyBack Profit 13704 20556 30834 41112
Profit 9% 13% 20% 26%

Recommendation:

Review and Recommendation of HEG Limited Buyback 2018 by IZ team is: 5/10 Fair: 1-5 Good:5-7 Excellent: 7-10

    Pl read today’s report on HEG in money control where it is clearly mentioned that fair market price would be around 3900rs per share which is 90% above from current market price.

    Could we expect some 15% to 20 % rally in HEG when buy back tender date will be announced? I had 30 nos share on record date and after that I have added again 10 stocks and now total holding is 40 nos as on date. Now my question is how much max number of share should I tender ? 30 nos or 40 nos??

    When the mail for buy back is expected from HEG / registrar? I have not yet got any official intimation.
    Please inform the process of applying to buy back offer of HEG.

      Please wait for the letter of Offer to come. In the letter of offer following information would be provided to shareholders

      1. Entitlement Ratio based on the Record date.
      2. Opening and closing date of Buyback.
      3. Final settlement date of the buyback.

      So please wait for the same to come. We will update here once it will come. The company also send the same to email to eligible shareholders.

    HEG posted terrific results. But it is difficult to understand why the share didn’t do well today.
    Are institutional investors playing a spoil sport, taking away retail investors hard earned money and creating volatility?!

    May I know branch address in Bangalore of MAS who is the registrar for HEG Limited

    SMALL SHAREHOLDER IS CATEGORISED ON THE BASIS OF RECORD DATE CLOSING PRICE & NOT THE BUYBACK PRICE

    BUYBACK REGULATION
    ———————————–
    2 (i) (n) ‘small shareholder’ means a shareholder of a company, who holds shares or other specified securities whose market value, on the basis of closing price of shares or other specified securities, on the recognised stock exchange in which highest trading volume in respect of such securities, as on record date is not more than two lakh rupee;

    Closing price on record date – 2375.10 (NSE, high volume)
    200000 / 2375.10 = 84.21
    Those who holds max 84 shares, eligible as small shareholder (retail)

    Ex date of heg is 7/2 and record date is 9/2. I bought it on 7/2 could I eligible for buyback or not.?

    HEG Ltd – Q3 FY19 (Cons.)

    Total Income at 1864.99 Cr
    842.71 Cr (121.96%) YoY | 1793.80 Cr (2.77%) QoQ

    YTD 5246.17 Crs vs.1465.95 (256.16%)

    Net Profit of 866.83 Cr
    342.11 Cr (153.18%) YoY | 888.90 Cr (2.46%) QoQ

    YTD 2526.02 Crs Vs. 447.33 (465.33%)

    EPS (in Rs 216.93
    85.62 YoY | 222.45 QoQ

    YTD EPS: 632.15 Vs. 111.95

    View: Strong result. YoY revenue and profit increased. Company is engaged in manufacturing of graphite electrodes, which are used by manufacturers of steel. Graphite electrode demand in international market is currently highly volatile due to this the share price is also volatile. Company is currently trading at annualized PE of around 4 which is very fair as per Industry benchmark. Company ROE and ROCE is around 80% and 90% respectively. Shri Ravi Jhunjhunwala has been re-appointed as Managing Director of the Company for period of five years w.e.f. 13th February, 2019. Shareholders through their Special Resolution by way of Postal Ballot approved the Buy Back of Equity Shares of the Company on 27th January, 2019 aggregating to Rs. 750 Crores, at a price of Rs. 5500/- Per Equity Share. Share high price 4900 and now 2100 almost 55% corrected and out of which 45% corrected in last 1-2 month. Current price is good to hold as far as Graphite electrode demand is concern.

    I hold 25 shares as of record date 9th feb 2019 , Am i eligible for the buyback? If yes then will i receive the further communication mail from HEG / NSE?

    I hold 50 shares of HEG as on 9th feb2019. I did not got any mail from NSE/ HEG for buy back till 10th Feb . What can be the reason / what should I do now??

      Dont worry, It will take time, may be 10-15 days or even a month after record date.
      Once buyback dates announced you will receive mail from registrar containing details about your entitled shares, letter of offer & tender form.

      Only 36 share of heg will go for buy back as a retail investor so sold 14 extra holding

    hi, the closing price for heg on 8th feb 2019 was 2,374 rs and accordingly the limit for retail investor is stock worth 2,00,000 Rs and hence, a person can hold 2,00,000/2374= 84.25 and so if a person holds less than 84 shares then is he/she eligible for the buyback?

        As defined under Regulation 2(i)(n) of the Buyback Regulations, a “Small Shareholder” is a Shareholder who holds Equity Shares whose market value, on the basisof closing price on Stock Exchangesas on Record Date, is not more than ₹2,00,000/-(Rupees Two Lakh only). As on the Record Date, the closing price on [•], having the highest trading volume was ₹[•]per Equity Share, accordingly all Shareholders holding not more than [•]Equity Shares as on the Record Date are classified as‘Small Shareholders’ for the purpose of the Buyback Offer.

        The closing price as on 09.02.2019 would be the highest Volume Price of the day.

        I have share of heg more than 100 on dt 09.02.2019
        So can I eligale for bye back
        If not then how much quantity can I kept
        Pl inform urgently

        I am retail invester
        I had hold more than 100 share of heg on dr 09.02.2019 in my dp account
        Is i am eligable for Byeback
        Pl do needful

          You eligible for buyback, but treated in General category, as your holding more than 2 lacs on record date

            Buyback divided into two categories
            1. Small shareholders (Retail – holding upto 2 lacs)
            2. General (holding above 2 lacs)

            15% of total buyback shares reserved for small shareholders.

            Generally entitlement & acceptance ratio of small shareholders is more than general category.
            ex. entitlement ratio
            ————————————- Retail —————— General
            BOSCH ————————- 41.34% —————— 2.90%
            Dhanuka Agritech ———– 10.45% —————– 2.72%
            Mphasis ———————— 16.95% —————– 3.33%
            BHEL —————————- 18.39% —————– 4.58%

        Wrong only 36 shares are eligible under retail invester 5500 rate multiply 36 =198000

      But in case of HEG , I sold shares on 7th feb(ex date). Received msg from CDSL about share debit on 8th feb. Is this normal? Will I be eligible for buyback in this case?

        No, i don’t think so. Ex-date was 6th since 9th is a holiday. Your settlement will be done on 11th.

    My account is with zerodha. I am checking daily for the listing of HEG under buyback option. What is the DATE on which it will appear for tendering my shares for buyback

      Do not check daily. We will intimate it on InvestorZone once it is finalized. Buyback remains opens for 12 days so do not worry.

    Everyone can Participate in Buyback who has Purchase till 6th Feb and value under 2,00,000 as retail investor.You will received email from NSE/HEG to participate in Buyback.After that Contact your Brokerage Firm like Zerodha , IIFL , SMC , 5paisa etc… to add you in buyback process.

    Public retail Shareholding <2lacs category is 12.34% as on 31.12.2018 as reported by company in return furnished to Authorities. Looking to this what could be the ratio of acceptance for retail shareholders.

    Should one participate as retail or general investor? As per my understanding, acceptance ratio far retail investor is quite higher than general.
    For instance: 30% of 2lac is quite higher than 3% of 3lac.
    Should a general investor reduce/sell his some quantity to become a retail investor. What u guys think?

      Apply as a Retail. Generally, the general category have less AR.

    i have value of my shares equivalent to 1.85L today,if shares increase tmrw and day after,will i be in retail or general category ? because today i last date for shares to be in demat.Please clarify.

    for buyback category Retail or General, which price is considered Rs.5500(Buy back price) or market price as on Record date ?

    i have value of my shares equivalent to 1.99L today,if shares increase tmrw and day after,will i be in retail or general category ? because today i last date for shares to be in demat.Please clarify.

      valuation calculated on closing price on record date i.e. Friday 08-02-2019 (as market closed on 09-02), if your valuation on Friday below 2 lacs, then retail otherwise general category.

      I hope, today is not the last date to have shares in the demat account.
      Mr.Wizard, please clarify.
      Since, some of my shares were lying in the SK margin, which needs to be moved to the DP account and is happening by tmrw. So, Will those shares be eligible for buyback purpose?? Pls clarify. Thanks

        As mentioned above…..By end of tomorrow I.e. 7th Feb, those shares will be in my dmat account. Will that shares are eligible for buyback?? Please clarify. Thanks

        today is last date for buying shares for buyback.
        Who bought shares today (will be credited on 08-02-2019 evening in demat) will be eligible for buyback alongwith who already holds shares in demat.

      i have value of my shares equivalent to 1.85L today,if shares increase tmrw and day after,will i be in retail or general category ? because today i last date for shares to be in demat.Please clarify.

      It will depend total no.of shares holding by small shareholders (holding upto 2 lacs) on record date (09-02-2019), will be declared in letter of offer. Also u will get mail from registrar regarding your entitled shares.

    Somewhere in communication block a link is given for knowing the record date of 9th February 2019 for this buy back offer but the date has not been indicated in the respective column against the offer. Why is it so. Please clarify if the date/news is not confirmed.

      The date is confirmed and those who will buy today will be eligible for buyback. Tomorrow selling might happen for the investors who participated only for buyback purpose. They will buyback again the required quantity after the announcement of Entitlement ratio.

    Market Wizard if I have just 1 share of HEG will my share be accepted in buyback? Or it will be accepted only if acceptance ratio is 100%(which obviated is impossible).. is there any minimum number Of shares holding criteria for a buyback…

    Retail invertor 2 lakh is calculated on market value on record date or Buyback value of 5500?

      As previously said, Dont play ONLY for buyback, as entitlement & acceptance ratio may not be favourable.
      Stock has run more than 30 times within 2 yrs & lost more than 60% in last 4 months
      Year ———- High ———— Low
      2016 ———- 203.00 ——— 116.10
      2017 ———- 2336.35 ——- 147.05
      2018 ———- 4955.00 —– 2211.55
      2019 ———- 3742.30 —– 1971.00

    I bought shares in end of dec’18 after announcement of buyback, will I eligible for buyback

          Buyback dates will be announced by the company (still not declared), buyback may take 1-2 months after record date.
          You will receive mail from registrar containing letter of offer, tender form & your entitled no. of shares details for buyback.
          Entitled shares means no. of shares that confirmly accepted from you as per entitlement ratio.
          You can tender shares through buyback window directly (if provided) or through your broker by submitting Tender Form.

    Acceptance ratio Calculation:
    From money control Public share holders: 58451 & shares : 15569163,
    Total bubback shares : 5098325
    Total Public Shares : 15569163
    <2L Share (Approx. Bell curve) : 342521
    Acceptance under retail for 2L Shares + non accepted shares in retail category of <2L : 15517784
    Acceptance under Non-retail: : 33%
    Accepted shares under non-retail for <2L : 94690
    Total Acceptance for retail investors under 2L Rs Shares : 43%

      Total bubback shares : 5098325
      Total Public Shares : 15569163
      Under 2L Share (Approx. Bell curve) : 342521
      Acceptance Under retail for Under 2L (15%) : 51378
      Balance shares after retails reserved Buyback : 5046946
      More than 2L Shares + non accepted shares in retail category of Under 2L : 15517784
      Acceptance Under Non-retail: : 33%
      Accepted shares Under non-retail for Under 2L : 94690
      Total Acceptance for Under 2L : 43%

      Total buyback shares 1363636 (Corrected)
      Total Public Shares 15569163
      Under 2L Share (Approx. Bell curve) 342522
      Acceptance Under retail for Under 2L (15%) 51378
      Balance shares after retails reserved Buyback 1312258
      More than 2L Shares + non accepted shares in retail category of Under 2L 15517785
      Acceptance Under Non-retail: 8%
      Accepted shares Under non-retail for Under 2L 24620
      Acceptance ratio for Under 2L > 22%

    Acceptance ratio Calculation:
    From money control Public share holders: 58451 & shares : 15569163,
    Total buyback shares : 5098325
    Total Public Shares : 15569163
    <2L Share (Approx. Bell curve) : 342521
    Acceptance under retail for 2L Shares + non accepted shares in retail category of <2L : 15517784
    Acceptance under Non-retail: : 33%
    Accepted shares under non-retail for <2L : 94690
    Total Acceptance for retail investors under 2L Rs Shares : 43%

    Every one is saying that 09 Feb 2019 is record date for BuyBack. It’s that official or not? If yes, why it is not updated in buyback procedure.

    Wizard ji, what is your opinion? You are also mentioned the same date and also seen another comment from you wait for record date.

    If I have only single 1 share in Demat then if I apply for buyback will it be considered becasue if 30% acceptance ratio then 0.3 share never accepted and have to accept minimum 1 share

    Is it true so I apply it??

      It is rare that acceptance ratio will be 100%, it is advisable that hold minimum 5 share while apply for buyback. If acceptance ratio will be 20% at least 1 share will be accept in buy.

      Where it is mentioned that minimum 1 share have to be accepted??
      At least, if it is 0.7 share, then, it may be considered as 1 share, if it is rounded off.

    In your example, you have calculated 36 shares for buyback i.e. 200000 / 5500 = 36. So to qualify in retail category my number of shares have to be less than 36 only? or if on record date the closing price of the stock is Rs. 4000, then i will be eligible to tender 50 shares also in retail category i.e. 200000 / 4000 = 50 ?

      Yes. You would be eligible if the price is 4000. The Calculation of 36 shares is the maximum share for buyback purpose to be on safe side.

    Hello
    How much shares will consider for buy back am holding 50 shares. If sebi rejects the approval is buy back will be cancelled

    I have close to 100 shares, so I want to sell some to be considered in retail category for buyback.

    My question is can I sell on 6th feb for that, Since record date is 9th Feb (Saturday), so ex-date should be 7th feb, right?

    Can someone clarify please.

      Technically there should not be an issue if you sell on 06.02.2019 but to be on safer side sell on 05.02.2019. Actually, Shares are reflected in T+2 days and Saturday is a holiday.

        Since 9th is Saturday, that is why Ex-date for some one who wants to participate in buyback is 6th. T+2 = 8th shares will be in his account and he will be entitled. Similarly for me, If I sell on 6th, I won’t have those shares on 9th.

    I have 60 heg shares, I will be considered as retail or standard client? So how many can I offer for buyback.

    I have HEG shares more than 2 lakh.. how to participate in buyback ? Am I not eligible for buyback? Or eleigible for only 2 lakh.. ? I have 200 shares of HEG. Is their any HNI category? If yes, what s the difference with retail category?. please suggest…

      Those who holds shares on record date eligible for buyback.
      Who holds shares below 2 lacs as per closing share price on record date considered as retail / small share holder others as general category.
      Generally there is huge difference of entitlement/acceptance ratio between Retail & General category.
      ex. Mphasis entitlement ratio for retail is 16.94% while for general is 3.32%
      Dhanuka Agritech entitlement ratio for retail is 10.45% while for general is 2.71%

    HEG Buyback Receives Shareholder Approval. What Next?

    After plunging 20% on Monday, HEG Ltd was again locked in a 10% lower circuit yesterday.

    After the company’s latest announcement, the stock price has rebounded 9%. From the prevailing stock price level of Rs 2,140, the buyback price of Rs 5,500 offers a premium of 157%.

    But before you decide on taking any action, let me take you through the latest developments…

    After the market hours yesterday, HEG Ltd published the results of the postal ballot for the shareholder approval of the buyback.

    99.89% of the votes were in favour of the buyback. As such, the buyback has now received the prerequisite shareholder approval.

    As per the buyback regulations, once the voting process is over and the buyback proposal is approved by the shareholders, the company undertaking the buyback through the tender offer route is required by regulation to make a public announcement within two working days from the date of declaration of results of the postal ballot.

    This means that HEG should make a public announcement of the buyback latest by 31 January 2019.

    A company making a buyback offer is required to announce the record date in the public announcement. As you are aware, the purpose of the record date is to determine the entitlement and the names of the shareholders who are eligible to participate in the proposed buyback offer. Thereafter, the company shall file a draft letter of offer within five working days of the public announcement.

    As per buyback regulations, the company shall not withdraw the offer to buyback after the draft letter of offer is filed with SEBI or public announcement of the offer to buyback is made.

    So, once the public announcement is made, we can be certain that the company will not withdraw the buyback offer.

    But even after this stage, the buyback needs the approval of the capital market regulator. As you may know, the L&T buyback was recently rejected by SEBI on the ground that the company’s post-buyback consolidated debt to equity ratio would be greater than 2 times. (Read: Does the L&T Buyback Fiasco Affect Other Buyback Trades?)

    So, some of you may have this question: Could the HEG buyback be rejected by SEBI, just like the L&T fiasco?

    It’s certainly a very valid question.

    So, let’s check if the company fulfills some of the key conditions and requirements for buyback of shares.

    As per buyback regulations, the funds deployed for the buyback cannot exceed 25% of the aggregate of the fully paid-up share capital and free reserves of the company.

    The aggregate paid-up share capital and free reserves as per the latest audited standalone balance sheet of the company as on 30 September 2018 is Rs 3,175.90 crores. As per the 25% limit, the funds deployed for the HEG buyback cannot exceed Rs 793.97 crores.

    The maximum amount proposed to be utilized for the buyback, does not exceed Rs 750 crores and is therefore within the limit of 25% of the company’s fully paid-up share capital and free reserves as per the latest audited financial statements of the company as on 30 September 2018 (the latest audited financial statement available as on the date of board meeting recommending the proposal for the buyback).

    The other important condition is that the ratio of the aggregate of secured and unsecured debts owed by the company after buyback shall not be more than twice the paid-up capital and free reserves. In other words, the post-buyback debt to equity ratio should not exceed 2 times.

    This is the condition that L&T failed as SEBI considered the consolidated numbers and not the standalone ones.

    As per HEG’s consolidated balance sheet as on 31 March 2018, the company had zero long-term borrowings, Rs 297.45 crores worth of short-term borrowings, against a networth of Rs 1,907.5 crores. In other words, the consolidated debt to equity ratio as on 31 March 2018 was 0.16 times.

    In its September 2018 quarter conference call, the management has said that the company had become debt-free with no long-term or short-term debt.

    So, given this, it seems quite unlikely that the company’s post-buyback debt to equity ratio would cross 2 times.

    What to Do?

    Despite all the adverse conditions that have currently engulfed HEG – the sectoral headwinds for graphite electrode manufacturers as well as the untimely death of one of its key management personnel, the buyback seems to be on track so far.

    Nonetheless, it is important to remember that the plunging stock price is a big risk to the buyback trade as it would make the exit difficult.

    One needs to tread with caution at this juncture.

    If you have already bought some shares of HEG, I would suggest not to rush to buy more shares to average your cost.

    If you were planning to buy the shares, but haven’t bought yet, I would like to remind you this is a high-risk trade and may not be suitable for all investors given the extreme volatility in the stock price and the adverse sectoral conditions.

    Even if you have the appetite for high-risk trades, I would suggest a very small allocation so that if the trade unfolds against our expectations, the hit is not too big.

    Also, if you plan to invest a small quantity, do not put all the money in one go. It is better to take a staggered approach.

    Please tell me How much maximum time a company can take to credit money of shares bought back in buyback process?

    How many shares are considered as small scale investor.2lakhs divided by 5500.or 2 lakhs divided by the market price

    HEG Limited
    Buy-Back
    Record Date : 9th Feb, 2019
    CMP = Rs. 2132.25 per share
    MARKET CAP = Rs. 8532.88 crore
    BUY – BACK Price = Rs.5500 per share
    Buy Back of Shares = 13,63,636 Equity Shares (Thirteen Lakh Sixty Three Thousand Six Hundred Thirty Six) of the Company, being 3.41% of the total paid up equity share capital of the Company
    Route : Tender offer
    Total Buyback size : Rs 750 Crore

      Sir, will you please inform me that what percentage of total holding of shares company will buyback?

    Sir,
    If I have 45 shares in one DMAT account & 21 in another DMAT account ( both owned by single owner) – then can I participate in buyback procedure? Which share price they consider to account 2.00 lac per person- purchase price or market price?

      Yes u can participate, no. of shares clubbed by PAN No. & then categoried into General & Retail.
      For calculation of Retail category closing price on Record date will be taken

      Value = total no. of shares held (all demat) on record date * Closing price on Record date

    Sir, I hold 150 shares at 3758/-. I did receive letter for eVoting but I didn’t eVote through NSDL link provided. Can I still offer my shares in this buyback? Or only those who took part eVoting are eligible?

    The price erosion makes buyback juicy. I want to buy below Rs 1500. Just one more lower circuit would be pretty good.

    I have 40 heg shares with average price 3514.53 shares bought from dec onwards. . I couldn’t submit my e_voting for buy back. I can doing buy back and what shall I do? Kindly advice.

    HEG is down today by almost 15% and trading at 2350/-.
    Can we accumulate more at this price for buyback or just hold and watch?

    L&T had reduced buyback from 1500 to 1475 while declaring record date. Now the way HEG has fallen that gap with current buyback price is almost 50%, there could be possibility that HEG may also reduce buyback price while declaring record date.

      Please do read both the Postal ballots carefully. L&T had communicated that they will do buyback at maximum price of 1500 and board will decide the price later. Whereas HEG has said in Postal Ballot that they will do buyback at 5500.

      Whether the Resolution is approved or the timing of buyback etc. are separate matters but HEG cannot revise price.

      LT: Company at its
      meeting held today at 9.30 a.m. and concluded at 11.10 a.m. has approved a proposal to buyback up to 6,00,00,000 Equity Shares (Six Crore only) of the Company being 4.29% of the total paid up equity share capital, at a maximum price of Rs. 1500 (Rupees One Thousand Five Hundred only) per Equity Share (hereinafter referred to as the “Buyback Price”) for an aggregate amount of Rs. 9000 crore (Rupees Nine Thousand crore only) (hereinafter referred to as the “Buyback Size”). The specific price will be determined by the Board/Committee under the authority of the shareholders in accordance with the SEBI(Buyback of Securities) Regulations, 1998 (“the Regulations”), at
      a premium over the daily average of the closing prices of equity shares of the Company quoted on the National Stock Exchange of India Limited during the two weeks preceding the date of the Board/Committee meeting subject to the maximum price of Rs. 1500 per share

      HEG: including any amendments or statutory modifications for the time being in force. (“SEBI Circular”), at a price of Rs. 5,500/- (Rupees Five Thousand Five Hundred only) per Equity Share payable in cash for an aggregate consideration not exceeding Rs. 750 Crores (Seven Hundred Fifty Crores only) (“Buyback Size”) excluding transaction costs viz. brokerage, applicable taxes such as securities transaction tax, GST, stamp duty, etc. The Buyback shall be within 25% of the aggregate of paid up capital and free reserves of the Company as per the latest audited financial statements of the Company as on 30th September, 2018 (the latest audited balance sheet
      available as on the date of Board Meeting recommending the proposal of the Buyback).

    As per CNBC , there is a relief for HEG buyback. HEG management has clarified that they will finish the buyback by March.

    Graphite electrode maker, HEG Ltd, on Friday said share buyback offer worth Rs 750 crore is on track and will be completed by March 2019.

    Last year, the board of directors of HEG approved a proposal to buy back up to 13,63,636 shares of the company, being 3.41 percent of the total paid up capital of company for an aggregate amount not exceeding ₹ 750 crore.

    In an interview to CNBC-TV18, Ravi Jhunjhunwala, chairman and managing director, said, “No policy has changed as far as China is concerned and it makes very little difference to the rest of the six-seven global players in the graphite business. Two Indian companies produce about 20-25 percent of low end electrodes, which is called the non-ultrahigh power (UHP) as China only produces and consumes non-UHP electrodes.”

    Jhunjhunwala said, “HEG doesn’t sell anything to China market so there is no impact to our exports and India doesn’t import anything in the UHP sector from China. China’s environment policy remains as strict as it used to be a year ago.”

    “The only thing that has changed in China in the last 18 months is that it doubled electric arc furnace production from about 50 million tonne to about 100 million tonne. China’s electrode demand has subsequently doubled from 50 to 100 million tonne. In anticipation of that, Chinese companies are building new graphite plants and expanding their existing plants. The entire metal space including aluminium, copper and steel are slowing down and the world is slowing down, which is nothing specific to us. So obviously, there is some sort of uncertainty about the future,” he added.

    I am a new entrant of heg shares, shares bought from december.18 end onwards. I understand that the co. hasn’t announced record date. I couldn’t submit my e_voting for buy back. Can I park in buy back now and what shall I do? Kindly advice.

    HEG and Graphite are falling as new large capacities are coming up in China.

    Dear,sir I am broker to many client participate in your buy back programma so you have confirm date accpptestion rasoi

      First, we need to see how much deep the price of the share will fall. Buyback and all we will be tackled lately.

    HEG Buyback likely to cancelled.

    Postal ballet to be held on 28th

    Huge increase in the number of individual shareholders from 58,451 in Sept-2018 to 1,23,823 in Dec-2018. Lot many people seemed to have bought just 1 share.
    Most of them would be disappointed as it is unlikely that all those holding one share would get successful buyback.

    hey …can anyone tell me about heg buyback.
    i own 20 shares by zerodha…donot know how to tender shares

      Still, company has not issued a Letter of Offer. The same will be updated here once the LOF will be issued. So keep visiting here for latest updates.

      thanx alot sir..
      plz solve my issue as i am new in market and donot know basic things like
      * i hv demat account with zerodha in cdsl …so hw can i participate in evoting in heg…as it is showing only nsdl….

      * is it compulsory to vote in heg
      * differnce between evoting and tendering shares..

    Mene Suna he ki Bosch buyback me Kai logo ne 1 share demate me kharida tha.
    To unka tender ho gya.
    To heg aisa ho Sakta he kya.
    Bosch buyback me participate karne vale please reply.

    Sorry if this is a foolish question. I am interested in buyback of all the available HEG stocks, so i should be giving assent to ‘Buyback’ resolution and dissent to ‘Investment/Loan/Securities’ correct?

      About BuyBack, YES.
      I don’t have much knowledge on the other one. I just opted YES for both.

    Hi Ramesh..I haven’t received any mail from heg though I am holding 75 heg stocks..What could be the reason..And what is the subject line for the mail.. Please respond

      If you broker is in CDSL you must check with evotingindia website, if it is NSDL, you must check with below link belongs to NSDL. Hope you can explore easily about your login ID and OTP fur login.

      About BuyBack, YES. Other one I am not sure. I don’t have much knowledge on it If say YES or NO. I just mentioned YES for both.

      Hi Ramesh..I haven’t received any mail from heg though I am heg stocks..What could be the reason..And what is the subject line for the mail.. Please respond

      Hi Ramesh,

      Sorry if this is a foolish question. I am interested in buyback of all the available HEG stocks, so i should be giving assent to ‘Buyback’ resolution and dissent to ‘Investment/Loan/Securities’ correct?

    The Company had completed the dispatch of Postal Ballot Notice dated 26th November, 2018 to all the eligible shareholders of the Company, by Friday, the 28th December, 2018.

    Market wizard Ji,
    At current market price of HEG there is 45-48% buyback premium. Assuming the acceptance ratio is in the range 15-20%, gain on buy back comes down to 10-11%. Now the only thing left is the unsold shares. Can we expect a decline in the price of HEG as it happened in case of m-phasis whereby investors are going to incur to net loss?

      Chances of downside in the share price is less. The Graphite India and HEG both have bounced back from their support. HEG not breaking 3500 and Graphite not breaking 700 shows good buying is coming at these levels.So risk and reward ratio for buyback at CMP would be good.

    Received an email about e-voting. it will start from 29th Dec 2018 9AM & ends at 27th Jan 2019 5PM.

    Hi…I am holding 100 shares of HEG from long time , am I eligible for buyback …If not please suggest me ..Thanks

      I hope,
      you are eligible under general category (worth is around 3.6L as per today’s market price).
      You will not be treated as Retail investor (2Lc limit).
      Only Possible option is share value must be below 2000 on record date (no one will look forward for this price I hope).

    Grey market buyers are giving 600 rs for heg buyback on 1 share.
    So I think 1 share on record date eligible for buyback

      No. As per CNBC news, China is oversupplying Graphite Electrodes. This is the reason Graphite India and HEG both are falling.

      Fangda Carbon New Material, China’s biggest producers of graphite electrodes, surged 5,267.7 percent in 2017 from the year before to 3.6 billion yuan ($521 million), while average profit margins in the Chinese carbon industry last year jumped more than 3,000 percent, according to CCIA data.

      China is expected to have graphite electrode capacity totaling 1.5 million tonnes by 2020, up 66.7 percent from 900,000 tonnes in 2017, said Sun. That will exceed the demand of fewer than 800,000 tonnes in 2020.

      Plus the price of raw material which is needle coke is also increasing due to supply pressure.

    My personal view is HEG would be a long and protracted from buyback purpose. Just like Just Dial which has taken almost 6 months for the entire process to complete. Its been one month from buyback announcement and the company has not yet even initiated Postal Ballot for shareholders approval. There would be quarterly results in between and a lot of volatility till the process completes.

    if 1 share is fully eligible for acceptance then it is buying opportunity with good profit. plz check applicable rules and share.

    Is it true that if any one has only one share and he tander in buy back , company have to accept that ?

      Shore holder having one shares or to be more generalised, those who have ‘ZERO’ entitlement, are prioritised just below promised entitlement. Let’s say if the entitlement is 1/10, all the shareholders having 1-9 shares will have zero entitlement and they will be prioritised when they tender their shares.

    Dont play only for buyback, as entitlement & acceptance ratio may not be favourable. (entitlement ratio may be below 10%)
    Keep close watch on stock prices with stop loss on holdings.
    Stock has run more than 30 times within 2 yrs.
    Year ———- High ———— Low
    2016 ———- 203.00 ——— 116.10
    2017 ———- 2336.35 ——- 147.05
    2018 ———- 4955.00 —– 2211.55

      Agree with P.M but fundamentally company is poised for more growth in the future. The Steel sector is doing good in India which is positive for the stock. HEG manufacture High Power electrodes which are used in the manufacturing of stell via EAF route. The demand for electrodes in European countries is huge.

      As per management, the only concern is rising prices of Raw material which is Needle Coke. Apart from graphite electrodes, needle coke is increasingly being used to make lithium-ion batteries, used in phones and electric cars, further tightening availability for the steel sector. If HEG able to transfer these rising cost to the suppliers than there would not be any pressure on OPM and NPM.

      I must say we will not able to see the kind of return stock has given in the last two years going forward due to poor sentiments of the market. However, if you buy this stock as an investment then this will not disappoint you.

      Still record date not announced, to eligible for buyback u have to hold shares till record date.
      Even shares bought two trading days before record date eligible for buyback.
      No. of shares matters for entitlement ratio (no of shares confirmly accepted)
      Even who holds only 1 share on record date also eligible for buyback (acceptance depends on total no of shares tendered)

    Monte Carlo is looking bullish on charts. Keep an eye board members

      No Moment on charts, almost flat after official announcement. Planning to exit (holding 300 qty),
      Any suggestions?

    Hi. This is my first buyback participation. I had 22 shares since last one month and i added 28 more on 28/11/18. Whether I am eligible for participation and if all my shares will be accepted by company? pls. enlighten me. thanks

      So you have total 50 shares of HEG. On Record Date( Which is not announced) , if suppose the share price is 4200, then you will not be considered under Retail Category but you can tender your share in General Category.

      Now next question, whether all your shares would be accepted?

      This will depend upon Acceptance Ratio.

        if record date is not announced can the company cancel buyback.
        I think it happened in case of PC Jewellers

        What if the market tanks and then they cancel the buyback.

        How to ascertain which company could cancel or which will be fair

          Don’t compare HEG with PC Jewelers. PC Jewelers do not have the cash to pay back interest properly to the banks and company was doing a buyback. In case of PC Jewelers , their lenders i.e. Banks have not allowed them to go for buyback at the final stage. Though ethically company never cancel buyback once Record date is announced. HEG is a cash-rich company with ultra positive business outlook plus their management is good.

            thanks for the answer wizard

            The shares almost tripled in 1 year. is there still any steam left in this
            Should we buy or wait till the record date is announced and almost everyone is saying that there is a high chance for market rout

            reasons which i could find
            1) OPEC meeting : almost certain that they will agree on production cut and that will boost prices
            2) Historically FII pull money out in december as it is festive month and spending increases(in western countries)
            3) Election results in 2-3 key states : prospects of BJP not very good, if congress comes to power market will tank(i believe)

      Vinay, the right answer to all your questions would be known in about 4 to 5 months. Till then everyone will speculate.

      You should have maximum 36 shares (200000÷5500) as on record date( to be declared) for retail investor, otherwise you have to be categorise in general category.

        Bro if the CMP on record date is less than 5500 which 99.9% it will be then shares held could be more.
        36 is the ideal case scenario(safest route) to be considered under retail category.

        Normally the calculation is No. of shares = 200000/Closed MP(Record date)

        if you have shares upto or equals this no you will be considered under retail category

    MONTECARLO Monte Carlo Fashions Ltd. RAJASTHAN GLOBAL SECURITIES PVT LTD BUY 1,11,837 373.73 – Tomorrow buyback announcement possible. They will cash the announcement momentum and exit…..Back door se buyback price pata ho gayi hongi…😃😃

      Please read this first. http://alphaideas.in/2018/11/28/heg-ltd-keh-ke-lunga/

      However, management of HEG Clarifies that 1200cr is large because it includes
      *Dedicated Graphite Electrode Nipple line for 1st time ever
      *Green Extrusion Process costs of 300cr+ for 1st time in 40 yrs

      Adds
      Unlikely to take debt for expansion
      Promoters intend 2participate in buyback.

        in the comments section it was mentioned that by mistake 1 got omitted, is that correct.
        if originally it was for 200 cr then 1200 cr is exorbitant even when we consider the technological improvements and all other factors(it is indeed bad planning on their part if that is the case)

        Don’t u think this smack of foul play by promoters

        Do you think we should participate in buyback and acceptance ratio will be how much as per your calculations
        >30 % or around or substantially less

        This is my day on IZ,

        Thanks @Market Wizard, I saw your comments, you reply on almost all queries in detailed level and I’m learning something your comments.

        I’ve one question, In above article HEG has mentioned that, management has approved the capex cost of Rs. 1200 crore and they would need within 30 months then

        Why would HEG management spend(to purchase something ) Rs. 750 in buyback.

    Let us see if this would be a trap like Mphasis where every large investor wanted to sell. Or euphoric like TCS where everyone wanted to buy before record date.

    The company is planning for expansion of Graphite Electrodes and related products capacity by 20,000 tonnes per annum (TPA).

    Macquarie has maintained outperform call on the stock with a target at Rs 5,823 per share.

    According to Research house, the announced capex of 1200 cr will increase the company’s growth visibility.

    It expects only a moderation of margin in FY20, while current upcycle is continuing. The high payback to investors should drive re-rating, it added.

    As per Annual Report see the snippet below:

    https://d2un9pqbzgw43g.cloudfront.net/main/shareholding-of-heg.pdf

    The no. of shares between 0-500 are close to 28,40,693 and no. of shareholders are 43,991.- As on 31st 2018

    The No. of shares reserved for Retail Shareholders is 2,04,545.

    So on that basis, the AR would be close to 7%. This is all the initial calculation. Things will change and evolve as we move.

    However, I feel downside in the share is very small from current market price due to cheap valuation. The sector outlook is good. Many brokerage houses have given a target of 6000. So no harm in buying HEG for an investment purpose and meanwhile whatever shares get tendered in buyback would be an icing on the cake.

      Hi, But as per share holding pattern for Sep 2018; The Individual share capital upto Rs. 2 Lacs is 44,91,393 shares, the percentage comes to 4.55%. Please let me know, if any thing needs to be considered. Thanks.

        Please understand this figure gives the total no. of shareholders who are holding shares between 0 to 20000(200000/10). However, for retail category calculations we want number of shareholders who are holding shares between 0 to 36.Hope u got the point.

      the data that you shared is for 0-500 but only investors having shares between 0-36 or 0-50 if we take CMP

      so i think the acceptance ratio would be considerably more than 7% maybe in range of 25% considering some investors will buy this for buyback purposes.

      can we have data like how many investors are there having shares between 0-50 and no of shares held by them, that will provide a more clearer picture

        You are 100% Correct. However, such data is not available anywhere except with the company. The Company provides this data via Letter of Offer which defines entitlement, till then the calculation of AR is somewhat not correct.

    HEG BUYBACK
    Sub: Outcome of Board Meeting
    Dear Sir,
    in continuation of our letter dated November 19, 2018 and in terms of Regulation 30 of the
    SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we wish to
    inform you that the Board of Directors of the Company at its meeting held today at 12:00
    Noon and concluded at 2.30 P.M. has interalia approved a proposal to buyback upto
    13,63,636 Equity Shares (Thirteen Lakh Sixty Three Thousand Six Hundred Thirty-Six) of
    the Company, being 3.41 % of the total paid up equity share capital of the Company, for an
    aggregate amount not exceeding Rs.750 Crores (Rupees Seven Hundred Fifty Crores only)
    (hereinafter referred to as the I’Buyback Size”) at Rs. 5,500/- (Rupees Five Thousand Five
    Hundred only) per Equity Share (hereinafter referred to as the “Buyback Price”).