The Indian stock market is poised for a lot of activity in the upcoming week of January 15-20, with two giants – Dhampur Sugar Mills and Chambal Fertilisers & Chemicals – taking centre stage through their respective buyback programs. These bold moves promise exciting opportunities and potential profits for their shareholders, making them focal points for investors during this period.
Dhampur Sugar Mills: 30 Crore Buyback:
Leading sugar manufacturer Dhampur Sugar Mills is kicking off the week with a targeted buyback offer of Rs 30 crore. This translates to the repurchase of 10 lakh equity shares, representing 1.5063% of the company’s total paid equity capital. The sweetness lies in the buyback price of Rs 300 per share, reflecting a premium of 12.2% over the current market price (Rs 267.50). This strategic move by Dhampur Sugar aims to achieve multiple objectives:
- Enhanced shareholder returns: By distributing surplus funds through the buyback, Dhampur Sugar aims to generate increased returns for its shareholders. This directly enhances their value proposition and instils confidence in the company’s commitment to their well-being.
- Boosting return on equity (ROE): By reducing the overall equity base through the buyback program, Dhampur Sugar anticipates an increase in its ROE. This ratio directly affects the profitability of the company and indicates its efficiency in utilizing shareholder investments. A higher ROE translates to improved financial performance and greater potential for future dividends.
- Optimizing capital structure: The buyback allows Dhampur Sugar to fine-tune its capital structure, leading to a more efficient allocation of resources. This improved capital structure can positively impact various financial metrics and pave the way for future growth initiatives.
With a record date of January 17, 2024, Dhampur Sugar’s buyback offer presents a clear opportunity for eligible shareholders to benefit from the company’s positive financial outlook and commitment to shareholder value creation.
Chambal Fertilisers & Chemicals: 700 Crore Buyback:
Chambal Fertilisers & Chemicals is raising the bar even higher with a colossal Rs 700 crore buyback program. This translates to the repurchase of up to 1.55 crore equity shares, representing a significant 10% chunk of the company’s total capital. The cherry on top? A 17.3% premium over the current market price, with a buyback price of Rs 450 per share compared to Rs 383.65. Chambal Fertilisers’ ambitious buyback targets a bouquet of objectives:
- Improved earnings per share (EPS): By reducing the total number of outstanding shares, Chambal Fertilisers expects a corresponding increase in its EPS. This ratio essentially measures the profit generated for each individual share, showcasing the company’s profitability per unit of ownership. A higher EPS makes the company’s stock more attractive to investors and can lead to a rise in share price.
- Enhancing return on capital employed (ROCE): Similar to ROE, reducing the equity base through the buyback can also lead to an increase in ROCE. This ratio measures the efficiency with which the company utilizes its invested capital to generate returns. A higher ROCE indicates better operational efficiency and a stronger financial position.
- Long-term shareholder value creation: At its core, Chambal Fertilisers’ buyback program aims to deliver sustainable value for its shareholders over the long term. By improving key financial metrics like EPS and ROCE, the company strengthens its overall financial health and creates a platform for future growth and profitability. This, in turn, translates to potentially higher dividends and capital appreciation for shareholders.
With a record date set for January 18, 2024, Chambal Fertilisers’ buyback program presents a compelling opportunity for its shareholders to capitalize on the company’s robust financial standing and commitment to long-term value creation.
Also Read: HDFC Bank UPI RuPay Credit Card: Full Review
How to apply for buyback on Zerodha
Zerodha, a popular online discount brokerage platform, makes participating in these buybacks easy. The process differs slightly depending on whether you’ve submitted a Demat Debit and Pledge Instruction (DDPI) or Power of Attorney (POA):
- Visit console.zerodha.com/dashboard.
- Click Portfolio > Corporate Actions.
- Hover on the stock, select Options > Place Order.
- Enter the number of shares for tender and click Submit.
- Authorize using CDSL TPIN and verify the OTP.
- Repeat steps 3-4 to confirm your participation.
- Follow steps 1-3 as above.
- Enter the number of shares you want to offer and click Submit.
Disclaimer: This article is for informational purposes only and shouldn’t be mistaken for financial advice. Before making any investment decisions, seek the guidance of a qualified financial advisor, considering your individual financial situation and risk tolerance. Neither the author nor relevant entities take responsibility for losses arising from decisions based on this article. The views expressed herein are solely the author’s and may not reflect any other entity or organization’s views. Always conduct thorough research and due diligence before investing, as past performance doesn’t guarantee future results.
Please remember that the market is fluid, and past trends may not hold true in the future. Stay updated on the latest market developments and company news to make informed investment decisions.