Kaveri Seed Company Limited Buyback 2024

(i) Kaveri Seeds today is India’s largest agriculture company specializing in Hybrid Seeds for Key Indian crops. Founded in 1976 by Sri G.V. Bhaskar Rao and later became a public limited company in 2007. It’s now one of India’s largest agriculture companies specializing in Hybrid Seeds in Key Indian crops, led by Mr. G.V. Bhaskar Rao.

(ii)With over 125 high-quality hybrids and varieties across various crops, Kaveri Seed has a diverse and risk-mitigated portfolio. It’s known for its leading hybrids in BT cotton, maize, pearl millet, sunflower, sorghum, rice, and vegetables, catering to different agro-climatic zones in India and exporting globally.

(iii)The company has earned significant goodwill among farmers and distributors, thanks to its commitment to seed innovation and a strong grower network across 12 different agro-climatic zones in India.

(iv)Kaveri Seed operates seven modern processing plants in key Indian locations, a large maize cob drying facility, extensive warehouse and storage capabilities, and advanced greenhouses for pest, disease, and Bt cotton containment.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Feb 23 2024
Buyback Opening Date: Feb 29 2024
Buyback Closing Date: Mar 06 2024
Buyback Offer Amount: ₹ 325 Cr.
Date of Board Meeting approving the proposal: Jan 05 2024
Date of Public Announcement: Jan 05 2024
Buyback Offer Size: 8.01%
Buyback Number of Shares: 44,82,7 58
Price Type: Tender Offer
FV: 2
Buyback Price: ₹ 725 Per Equity Share

Details of Buyback:

The proposal to buyback not exceeding 44,82,7 58 (Forty Four lakhs Eighty Two Thousand Seven Hundred Fifty Eight) equity shares of the Company (representing 8.01% of the total number of equity shares in the paid-up share capital of the Company) at a price of Rs. 725/- (Rupees Seven Hundred and Twenty Five only) per equity share payable in cash for an aggregate consideration not exceeding Rs. 325,00,00,000/- (Rupees Three Hundred and Twenty Five Crores Only)

Salient financial parameters:

Particulars (In Cr) Mar 2019 Mar 2020 Mar 2021 Mar 2022 Mar 2023
Sales + 808 929 1,033 968 1,068
Expenses + 596 676 735 765 816
Operating Profit 212 253 298 203 252
OPM % 26% 27% 29% 21% 24%
Other Income + 43 46 46 41 55
Interest 1 0 1 0 0
Depreciation 23 26 22 21 21
Profit before tax 231 273 321 223 286
Tax % 6% 5% 3% 4% 5%
Net Profit + 217 260 311 213 273
EPS in Rs 34.45 42.94 51.47 36.43 48.59
Dividend Payout %
9% 7% 8% 11% 8%

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of  Kaveri Seed Company Limited in Demat or physical form as on the record date [23-02-2024]. 2. Once you have shares in Demat, you can participate in the buyback process which is opening from [29-02-2024] by selling your shares through your broker on NSE or BSE. 3. Then on [26-03-2024], 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 275 Shares at CPM of Rs. 660 (2,00,000/725)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,81,500 1,81,500 1,81,500 1,81,500
No. of Shares Buyback 90 137 206 275
Buyback Profit 5,850 8,905 13,390 17,875
Profit% 3.22% 4.91% 7.38% 9.85%

65 Comments

    Bough more at 647.45 for buyback….
    Take your own decision…..

      I have purchased some @ Rs.650/-. But the purchase order for Rs. 645/- has not been executed. You have succeeded. Congratulations,Sir. God blesses you with all the best.

        Thanks SRK ji, but 5 -10 Rs here & there would not make much difference.
        Important and Still not able to understand the sudden rally and then fall from 760 to 647.. .Results are not good, but not very bad and its still a good company.. Hopefully would appreciate after release of Buyback program.

          Mr.Sumit, Nice time to buy. The results are not good why there is a steep rally? There is no occurrence of bulk deals in the recent past. BSE had a similar rally last year too. The number of public shareholders is 49.166 accommodating around 39% of shares.

          Did anyone have an update about record date?

          The whole agricultural sector is under pressure because of the global business outlook. Look at other companies like UPL, Dhanuka, etc.

            Is every other process like Postal ballot voting completed? We are just waiting for a record date announcement and maybe a price revision.

          Hello sir as per prospectus promotor willing to participate in buybck aggregating upto 22 lakh shares and total shares for acceptance is around 44 lakh so considering this acceptance ratio will be impacted

    Average results.. Not much trigger.. Some trigger may be from budget… Good for people who have quit…

    Lets see the record date… Difficult to have higher rate of buyback at the moment..

      Wow, what an amazing rise and phenomenal fall in two days.Could exit in part only because of my tragic experience with BSE in the recent past.

      Mr.Sumit, How did you come to conclusion about 100% AR?

      What are the probability of revision of buyback price? Did anyone have any information about record date?

        Rahul ji, when I posted message the market price was 760 and Buyback was 725, so anyone can have surrendered and have got 100%AR… But it’s market…

        :- ) 🙂 :- )

    My bad I added fund for kaveri seeds but seeing record date is after chambal buyback I bought chambal and later will buy kaveri seeds😢
    Now chambal is in loss and ER also too less while kaveri seeds is above buyback price.

    KSCL crossed 760. All those who have bought for Buyback can have a decent exit. Risky investors can hold till tomorrow for result.
    So its 100% AR 🙂

    Does anyone have a full list of buybacks where share price went higher than the buyback price ? Recently, in Arnold, BSE and Jagran Prakashan the buyback price was not changed , whereas in L&T it was. Any other examples that I am missing ?

      The price finally crossed the buyback price. I think they will wait until the last day to decide whether to increase the price. If the price is substantially higher than the buyback price just around the record date, they might increase it so that it is slightly higher than the market price at that time.

    Hopefully KSCL would cross the Buyback price of 725 in Market and price revision would be done…
    Experts kindly suggest your comment..

      Share price revision is very unlikely. The promoters are probably still going to tender their shares. Revision rarely happens. In a professionally managed company like L&T it can happen, but I would be surprised to see in happen in a family owned/managed company, unless the share price goes significantly higher.

        The Buyback committee has the right to revise the price. We can hope for revision only when the share price is significantly higher than the buyback price.

          The provision is standard, I think, but rarely exercised. L&T is the only example I can think of. In recent cases I remember, in BSE and Jagran Prakashan, buyback price was not revised despite share price being significantly higher than market price.

      Agrees Trinity ji and Rohit ji, yet if the company wants to make Buyback successful there should be at least 3-4% difference .
      For share holder it is advantageous to sell in Buyback then in market , due to the tax been paid by the company and not by the share holder.
      Lets see, but even with current rate the AR can be definitely very high >80%

        Sumit ji, keeping the price lower will benefit those who want higher AR rather than higher profit per share, because higher price will be offset by fewer shares being bought . Promoters’ cost of acquisition will be around face value. So, for them, unlike those who bought recently, the tax benefit will make sense even if the market price is significantly higher than market price. It is probably at least a couple of weeks to the record date. The share price might have moved a lot in either direction. Let us see what happens.

          Trinity Ji, I agree but please consider that current market price gap with BB price is directly proportional to the AR. With small gap or negative gap, very less people would apply and therefore High AR,
          Further, results are around the corner and expected to be good. Also the PE and growth story is good, so lets see if operator wins in collaboration with promoter.. or Promotor against operator,,,
          I feel currently KSCL is in sweet spot.. Thanks for your comments…

            Sumit ji, I agree KSCL is in a sweet spot and own the shares from several months ago. However, I think it will be risky for someone to buy at these levels only on the hope that the buyback price will be revised up.

      Let us wait and see.For the time being enjoying the gain is the main thing.I sold a small portion of my holding and booked profit. Apart from L& T,BSE made a small revision of buyback price which turned out to be insignificant very soon. Have not come across any other case. Control PR crossed the buyback price in between, but retreated by record date as per my memory. Sharing the joy of the moment with all the unseen friends of the zone.

    Best of the recent buyback. Company PE & growth is also good.. Looking to add more at 654 or lower,…

    Expected Minimum Entitlement Ratio for Small Shareholders (below Rs 2 lakhs):

    Dhampur Sugar Jan 2024: 2.25 %
    Kaveri Seeds Jan 2024: 30.04 %
    Chambal Fertilisers Jan 2024: 11.22 %
    Bajaj Auto Jan 2024 : 15 %

      @ MANOJ

      Kaveri Seeds Buy Back Jan 2024:

      Offer Size: 8.01 % of equity
      Reserved for Small Share holders: 1.2 % of euity

      As on 31st March, 2023:

      (1) 1-500 Category: 5.91 % equity or 33 lakhs shares held by 56,257 share holders (average holding to be 59 shares)

      (2) Share holders having less than 275 to 307 shares (assuming closing price on record date to be between 650 to 725 Rs) will be considered as Small Share holders (having shares less than Rs 2 lakhs)

      (3) I have assumed share holders (having shares between 307 to 500) to be 1.91 % & 4 % equity to be held by investors holding shares between 1 to 307.

      (4) Point no 3 is Pure Guess Work. Any one can have their own guess. There is NO FOOL PROOF WAY to find out exact no of equity held by Small Share holders before release of Actual Offer Letter.

      (5) Expected Entitlement Ratio Calculation : 1.2 x 100 / 4 = 30%

      I hope I could explain rationale behind my calculation and assumption.

        Hi Ankit, u should not consider the share holder holding pattern as of 31st March 2023.. u should consider as of 30/31st December. If u see for Dec quarter close to 70 lakh shares are now hold by ppl less than 2 lakhs. Even company has published dec holding data while announcing buyback. As per me entitlement would be around 15-20% max.

    Already moved out from this @ 670.82 with a nominal profit of 4%.

        As per my previous experience, if the buyback is at a premium of 15-20% with a decent buyback size then it will be profitable otherwise you will end in very nominal profit or loss as I sold all of my shares on the same day once the unaccepted shares credit to the demat account.

      Hello @ROHIT AGARWAL,
      When did you buy the stock(Kaveri Seed)? Do you follow any pattern like once got the buyback news? or any other criteria?

        Sorry for not replying earlier. I bought it on the day of when the annoucement is made for the board meeting for the purpose of buyback. Yes, generally I bought it at the time of release of buyback news.

      Rohit ji what’s your thoughts?
      Will it may fall as premium from CMP is only 9% so risk is high now.
      Waiting for some price fall is good I guess

        Sorry for not replying earlier. I bought it for the buyback purpose and moved out as the premium is not good. I think I will buy again if available near to 625 as I expect the ER will be around 20%.

    The companies can opt for Open Market buyback this financial year and next. However the size of the Open Market buyback shall reduce drastically.

    Phasing out of Buy-back from the open market through stock exchanges– Open market buy-backs through stock exchanges will be completely phased out from April 1, 2025. The gradual phase-out of the open market buy-backs through stock exchanges, shall be achieved by limiting the quantum of buy back permitted to less than: (a) fifteen percent of the paid up capital and free reserves of the company till March 31, 2023; (b) ten percent of the paid up capital and free reserves of the company till March 31, 2024; and (c) five percent of the paid up capital and free reserves of the company till March 31, 2025.

    Could someone confirm is open market buybacks are still allowed, or are allowed with more stringent conditions, or banned?

    What is the likelohood of Kaveri seeds being a tender offer?

      It’s 50:50 if the company decides to do open market or tender buyback. They can also vote against buyback altogether as well. If company decides to not do buyback or decides to do open market buyback then on monday stock could see some selling pressure.

    Good to see two companies with very nice financial parameters announcing their intention to buyback shares. Hope the offer will be attractive. Waiting eagerly for the outcome of the Board meeting.

      Hello Gopi, both seems to be good companies. However Kaveri seeds last 2 buybacks were open market buyback. Need to see this time

        Kaveri Seeds has been doing open market operations which SEBI has been thinking of banning because of possible misuse/manipulation. I hope they know that. Sugar may be sweet and I have bought some already. I don’t have to go for penny stocks atleast now. So I am happy.

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