Tuesday, October 27, 2009

Gwalior Chemicals - Udpate

I had earlier posted an update about the Gwalior Chemcials opportunity
The dates are finally out for the board meeting to discuss the dividend and /or share buyback. The board meeting is slated for Oct 30th and the agenda is as listed on the BSE site
Gwalior Chemical Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on October 30, 2009, inter alia, to consider the following:
1. To take the decision on distribution of dividend payout and /or share buyback.
2. To consider and take on record the financial results for the quarter ended September, 2009.
3. To change the registered office of the Company within the local limits of the city.

We should hear the final act on this special situation.

14 comments:

Mayank said...

Hi Ninad,

Finally the news is out!
Should we soon see levels close to 120?

Regards,
Mayank

Amit said...

Hi Ninad,

As you must be aware the buyback is at 120. A bit on the disappointing side. However, given that they cannot make another buyback for another year and the fact that they had announced their intention to distribute 100 crores by of dividend and/or buyback, what do you think is the likelihood of a bumper dividend (as the buyback uses only about 50 crs) post the buyback (given that the promoters stake jumps to 80% assuming at least 24.5% of the shares are tendered)?

Forgive my ignorance, but can a buyback price be revised? What's the likelihood in this case?

Also, could you enlighten me on the tax consequences of tendering shares in buyback?

regards,
amit

Ninad Kunder said...

Hi Mayank

I would expect the stock to move around the 110 mark.

I will be putting a new post listing down my thoughts post the announcement.

Cheers

Ninad

Ninad Kunder said...

Hi Amit

I agree it is a lil disapointing in the short run.

They cant do it in the same financial year. The company secretary has told me that they intend to do a additional buyback next year which will take care of the remaining 50 crores.

If u read the announcement of the quarterly results it states that this is "Phase 1 of the buyback program".

I dont expect any bumper dividend or revision of the buyback price.

Also the promotors will be tendering in the buyback so the overall shareholding will remain the same.

Cheers

Ninad

Watch Investments said...

Terrible for shareholders. Cannot believe they did this to share holders.

Amit said...

Hi Ninad,

Do you have any idea why the stock plummeted today? Can't figure out why. The buyback seems attractive now though.

Also, they haven't mentioned any timeframe for completing the buyback. Could this be the reason?

Sachin8778 said...

Where do you get the latest information on board meeting, press note. I googled it and came nothing significant. It is also not there on company website. I would appreciate any help in this regards.

Ninad Kunder said...

Hi Amit

I will put a note on the announcement in a day and the implications of the same. Hopefully that should answer your question.

Cheers

Ninad

Ninad Kunder said...

Hi Sachin

The announcement is on the BSE website in the corporate announcements section.

Attached the link to it.
http://www.bseindia.com/qresann/news.asp?newsid={4D23B88E-681B-4152-A56C-F59EC9B07855}&param1=1

Cheers

Ninad

Ragupati Chandrasekaran said...

watchinvestments,

I don't think this is a terrible deal for shareholders at all. It's not great for sharesellers, I'll agree. Also, remember that management is also tendering shares in this buy-back. Per my calculations, management's buy-back price is fairly close to the cash value/share post buy-back if the money related to the sale of the business that's currently held in escrow doesn't eventually materialize. Seems sensible and prudent to me. As for not paying a one-time dividend, I believe that's rational too. Far better to buy back shares on the cheap than it is to pay a taxable dividend.

Best,
Ragu

deep said...

Hahaha what a pity.....Management tendering shares...Guys this is just a ploy...Some one said the buy back price is close to cash value per share come on where is Rs 153 and where is Rs 120 dude. It is 20 percent less than the cash value...Management will not tender shares it is just a ploy by the company saying they will tender shares and so u will tender shares and every one will get their shares tendered at Rs 120. Company and Reliance Capital (7% holder) will go for a revised offer for Rs 150 in the second phase...Watch out for these guys doing the same...Welcome to the screwed up corporate world...In US they might have blocked the management if they had done like this...Unfortunately this is India bhai...

sachin8778 said...

Hey Ninad,

What is the reason you are so silent on the topic?

Sachin

Ninad Kunder said...

Hi Sachin

Been a lil caught up on work so havent been able to put out a post. Will do that for sure this weekend with my thoughts on gwalior.

Also have a few other ideas that I should be listing down.

Cheers

Ninad

Anonymous said...

Thanks Ninad - We are waiting!

Prashant