Welspun Living Limited Buyback 2024
Welspun Group is one of India’s fastest-growing global conglomerates with businesses in Line Pipes, Home Textile Products, Infrastructure, Warehousing, Steel, Oil & Gas, Advanced textiles and Flooring solutions. With the immense global presence in over 50 countries and a strong team of over 26,000 home textile manufacturers in India spanning varied ethnicities, cultures, and geographies, company have acquired global leadership in home textile products and line pipe. In order to stay prominent across all the businesses, it constantly strive to provide our customers with a delightful experience through innovation and technology. Welspun has a wide variety of home textile brands in India and a product portfolio in three major categories ,i.e, Bed, Bath and Flooring. which makes them the preferred choice in homes across the world.
Competitive Strength:
(i) Offer innovative products, based on extensive consumer research.
(ii) Highest market share in the US, and we hold a dominant position in India and the UK.
(iii) Global distribution network with an omnichannel support system in over 50 countries.
(iv) Vertically integrated facilities with 360o capabilities from farm to shelf.
Buy Back Offer Deal:
| Buyback Type: | Tender Offer |
| Buyback Record Date: | Aug 05 2024 |
| Buyback Opening Date: | Aug 09 2024 |
| Buyback Closing Date: | Aug 16 2024 |
| Buyback Offer Amount: | ₹ 278.44 Cr |
| Date of Board Meeting approving the proposal: | Jul 24 2024 |
| Date of Public Announcement: | Jul 24 2024 |
| Buyback Number of Shares: | 1,26,55,970 |
| FV: | 1 |
| Buyback Price: | ₹ 220 Per Equity Share |
Details of Buyback:
Salient financial parameters:
| Particulars (in cr) | Mar 2020 | Mar 2021 | Mar 2022 | Mar 2023 | Mar 2024 |
| Sales + | 6,741 | 7,340 | 9,311 | 8,094 | 9,679 |
| Expenses + | 5,526 | 5,988 | 7,950 | 7,341 | 8,310 |
| Operating Profit | 1,215 | 1,352 | 1,362 | 753 | 1,369 |
| OPM % | 18% | 18% | 15% | 9% | 14% |
| Other Income + | 139 | 68 | 63 | 121 | 146 |
| Interest | 178 | 198 | 131 | 130 | 153 |
| Depreciation | 481 | 454 | 420 | 442 | 394 |
| Profit before tax | 694 | 769 | 873 | 302 | 967 |
| Tax % | 24% | 28% | 30% | 33% | 30% |
| Net Profit + | 524 | 551 | 607 | 203 | 673 |
| EPS in Rs | 5.05 | 5.37 | 5.98 | 1.98 | 7.01 |
| Dividend Payout % | 20% | 3% | 2% | 5% | 1% |
How to Participate in buyback?
Profit from the buyback on the bases of acceptance Ratio:
| Acceptance Ratio | 33% | 50% | 75% | 100% |
| Amount Invested in Buyback | 161802 | 161802 | 161802 | 161802 |
| No. of Shares Buyback | 300 | 454 | 682 | 909 |
| Buyback Profit | 12600 | 19068 | 28644 | 38178 |
| Profit% | 7.79% | 11.78% | 17.70% | 23.60% |
56 Comments
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AR For Reserve category 42.93%
AR for General Category 2.50%
Thanks Ankit for the Quick Update..!
Thanks Ankit, pretty decent AR, the Cmp is near 195, well above purch price. A good buyback overall.
How did you got this information?
Reached 190+ Today, Any update On AR?
Good to see So many Buybacks declared .
One More- Savita Oil Technologies Ltd to consider buyback on 3rd August
Considering the tax on share buybacks effective from October 1st, we may see a surge in buyback proposals before that date. Our challenge is to identify the most promising buybacks given our limited available funds…
https://youtu.be/hNxruUDF62Y?si=Qpcxp0aV2uPXA_-O
Boys Oru Nalla Block Matirukku 😂
All at once . Which ones good , experts ?
One fine day an year ago, saw this forum, intrigued and came to know about buybacks. Opened couple of demats and with all the insights shared here ,
made some decent gains from the buybacks last year. So Short lived 😄 . What are the other best options we can look into, please share.
Indus Tower to consider buyback proposal on 30th July !
good rachit jee
Gopi ji, the tax proposal is actually quite clear. The only misunderstanding seems to be from people who are not familiar with the IT Act. The entire buyback proceeds will be treated as a distribution by the company and hence taxes as deem
*taxed as deemed dividend . The earlier taxation was under Section 115QA and the nee regime will be under Section 2(22) along
With Sections 46A , 74, 57, etc. Please look up these relevant sections yourself .
Thank you for your response and excellent explanations Trinity ji.If the scenario is going to be that bad, may be we have only the current three to participate in buyback.I still believe that you end up paying slab rate of income tax for buyback gains and rest of the whole thing is book adjustment.
I understand that entire buyback proceeds (and not gain) will be treated as income and will be taxed accordingly like any other income as per related slab, however this is going to be effective from 1st October 24.
Gopi ji, the buyback “income ” is going to be taxed as a dividend and the company has to withhold TDS on it. How will the company know the purchase price of every shareholder if only the profits are to be treated as dividends ? And how can the “dividend” be different for each shareholder based on their purchase price. Conceptually the treatment of purchase price as capital loss is meant to offset taxing the entire proceeds as dividend, but in practice it will result in prohibitive taxes for those in high tax brackets , which all promoters are.
My perception and response is purely based on the way a retail participant is going to be affected.I have seen that every share appreciate in value around 10 percent somewhere between the buyback process. That in itself is a huge reason for companies to go for buyback and major as well as minor ones get benefits.
Good to go for 177
With atleat 10 percent ER
I think the % size of the buyback was lower last time and ER was less than 10%. So, unless retailers have really dumped this stock since last time, 10% ER is unlikely .
42/615. ER is less than 6.9% in my case.
Around 1.3% buyback size. Quite low.
Buyback Price: 220Rs
Buyback Amount: 278.44 Crore
Record Date: August 05, 2024
Hi
आप buyback price सबसे पहले कहा से लाते हैं?
I do not think so. I think now the company will provide more buybacks rather than dividend as buyback tax liability get shifted to the shareholders from the company end which will be a huge savings for the company and boost their price.
Company is controlled by shareholders only. The tax rate in the hands of shareholders will be prohibitive . It will be cheaper to receive dividends.
How is it cheaper to receive dividends, especially when the tax treatment has been made identical?
It has not been made identical. The entire amount received from buyback and not just the profit will be taxed at the applicable rate . If you buy shares for 1 lakh and receive 1.2 lakh from buyback and your marginal tax rate is 30% , you will have to pay 36k as tax plus cess, etc . You can use 1 lakh paid for shares to offset capital gains, if any.
Sir, Whether in the given example, the amount of Rs.1 lac paid for purchase of shares will be off set against STG or LTCG if any as the case may be? In such case whether the net tax paid will be 36 k plus cess minus either 15 k (i.e 15% of 1 lac in case of STCG/12.5% in case of LTCG)? Please enlighten.
Yes , entire purchase amount is to be treated as capital loss and can offset capital gains, if they are present in the current year, or be carried forward as a capital loss to relevant number of future years.
Thank you
last line *20% of 1 lac
True promoters believe in increasing the wealth of shareholders. If a company decides to distribute wealth to its shareholders, then buyback is much better compared to dividends (in case of decent wealth distribution).
Promoters earn dividends on all the shares they hold.The tax on buyback is only on the accepted shares. Promoters can choose to participate in the buyback. They can also apply for a proportion of their holding to manage their personal tax liability. If the price of the company’s shares increases after buyback, promoters see a significant increase in their personal wealth.
If so, it will also be beneficial for those retail participants who have no taxable income .
They would be relatively better off, but just participating in a few buybacks may bring them into the taxable net and also it is quite possible they won’t be able to utilise the capital gains offset . In any case , the tax rate would be very high for promoters and large shareholders who decide these things.
Even before this budget it was always beneficial to have a PAN account (person with non Taxable tax bracket) that is not clubbed with your PAN account.
Interesting to see Welspun board meeting outcome today as there is a change in buyback process announced yesterday. can someone confirm, any new rule announced in finanical budget effective only from Oct 1 ?
Yes, 1st Oct 24.
Thank you Rohit ji for the valuable confirmation.
I read somewhere that the buyback funds should be received in your account before oct 1 for the old rules to be applicable. If the buyback process starts earlier , but does not complete by Oct 1, the new regime will be applicable . Can someone confirm is this is true ?
I think you will get this information with the buyback announcement. As per my knowledge, the buy back get completed when the company do extinguished the buyback shares from its balance sheet which will be the precise time to find out the person who should discharge the tax liability.
Actually the entire amount received from company , not just profit, will be treated as dividend and you can take capital loss on the purchase price, so in many cases effective tax rate will be much more than 100% . Buybacks bye bye.
What if I don’t have any other capital gains ? Can I set it off against my salary income ?
No sir you can not only short term capital gain can adjust
…
So you are paying tax on revenue not on profit … horrible
Capital loss can only offset certain capital gains, but you can carry the loss forward to future years.
No, not that way in my humble opinion.Only income (gain in this case) is taxable. The upper limit of income tax in India is 30 percent. There seems to be lot of confusion and misinformation/misunderstanding in this case. Hope this will be clear in a few days.
Please see my response to wannabevalue investor for an example of how total tax can exceed the profit and how the “effective” tax rate will thus be greater than 100% . If 1 lakh of shares held for long term are sold for 1.2 lakh, tax on deemed dividend is 36k, value of capital loss offset is 12.5k, if used fully. Thus net tax is at least 23.5K on a profit of 20k.
This is without counting cess,. surcharge,.etc.
Buyback ko wannaqqm bol do bhai … treated as dividend 🤣
Yes, from 01 Oct 24, exemption is withdrawn for buyback of equity shares. It will be considered as a dividend under section 2(22)(f) and TDS is liable to be deducted at a rate of 10% under section 194.
I think the things will get complex from here. As dividend is taxable in the hands of the recipient under other income head as per applicable slab rates and no deduction is allowed for buyback dividend. So complete buyback proceeds will be taxable as dividend (without any deduction) and purchase price of the shares will be a short or long term capital loss.
If so, it’s absolutely absurd. There won’t be any more buybacks once this provision comes to effect. I have already sold my holdings of KDDL, WELSPUN and part of Aurobindo Pharma.
I do not think so. I think now the company will provide more buybacks rather than dividend as buyback tax liability get shifted to the shareholders from the company end which will be a huge savings for the company and boost their price.