New SS idea – Welspun Enterprises Ltd – Special dividend and Tender offer buy back
The company on 30/12/22 announced a special dividend of ₹7.5 per share (record date – 11/1/23) and a buy back through tender offer of a maximum of 11,750,000 shares at ₹200 per share (235 Crs). The record date for the buy back is yet to be decided.
The company’s shareholding as on 23/12/22 was as below:
Promoters – 53.76% – 80,625,003
Retail + Body corps + NRIs – 40.98 – 61,468,766
Others – 5.26 – 7,889,287
Total shares – 149,983,056
FY22 AR says only 8.12% of shares were held by small shareholders (less than 3000 shares). In reality even less as, probably 5-7% max.
Buy back – 7.84%
Promoters intend to tender a max of 5,350,000
Reserve for Small shareholders – 15% of the buy back
Assumptions
*SS = hold 10% or 40% *
Participation = 100%, 75%, 67%
Share price after buy back = 160, 170, 180
I have approximated the acceptance ratio to 1 in 6, 1 in 5, 1 in 4 and 1 in 3.
The potential upside could be anywhere between 2 to 15%, including the special dividend but it could very well be more than this if the cost is lower or the acceptance ratio is higher.
Most probably this trade can be completed before the end of Feb so, the annualized returns look even more appetizing.
Please point out any mistakes in my estimates.
Disclosure – Not yet invested. Mulling
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