Can you make money on Tech M buyback? Let’s find out!
The Math
| BSE code | 532755 | |||
| Buyback Type: | Tender Offer | |||
| Buyback Record Date: | Mar 06 2019 | |||
| Buyback Offer Amount: | 1956 cr | |||
| Date of Board Meeting approving the proposal: | Feb 21 2019 | |||
| Date of Public Announcement: | Feb 21 2019 | |||
| Buyback Offer Size: | 2.10% | |||
| Buyback Number of Shares: | 20,585,000 | |||
| FV: | 5 | |||
| Buyback Price: | 950 | |||
| To be eligible for buyback the shares should be bought on or before: | Mar 06 2019 | Buy Price | Sell Price | |
| If Shares worth Rs. 2,00,000/- are bought at CMP of Rs. | 825.00 | 830.35 | ||
| Acceptance Ratio | 25% | 30% | 35% | 40% |
| Amount Invested in Buyback | 200,000 | 200,000 | 200,000 | 200,000 |
| No. of Shares Bought | 242.00 | 242.00 | 242.00 | 242.00 |
| No. of Shares boughtback | 61 | 73 | 85 | 97 |
| BuyBack Profit | 8,243 | 8,775 | 10,275 | 11,775 |
| Profit/Loss on remaining shares | 0.48% | 0.45% | 0.42% | 0.39% |
| Total Profit(%) assuming price to remain at purchase cost | 4.12% | 4.39% | 5.14% | 5.89% |
So the base case scenario shows that a minimum of 4.12% profit is what you can make at the current purchase price of 825 if the acceptance ratio is 25% minimum.
Most IT companies Buy Back Acceptance ratio is between 25%-35%
By Jamnadas Virji Advisory