Suprajit Engineering Limited is a prominent player in the automotive components industry. It has announced a significant buyback plan worth ₹112 crore for its equity shares on 14th August, 2024. The record date for this buyback is August 27, 2024.This article provides an in-depth analysis of the buyback and also includes details about the company, its financial performance, and the implications of the buyback for shareholders.
Table of Contents
Company Overview
Suprajit Engineering Limited was established in 1985. It has grown into one of the leading manufacturers of automotive cables and halogen bulbs. The company supplies its products to a wide range of sectors, including the automotive, non-automotive, and aftermarket segments. Over the years, It has expanded its global footprint and It caters to customers in several countries. The company’s commitment to quality, innovation, and customer satisfaction has strengthened its position as a trusted supplier in the automotive industry.
Financial Performance
Suprajit Engineering Limited reported a strong financial performance for the quarter ended June 2024. The company’s net profit increased by 15.16%, reaching ₹38.14 crore, compared to ₹33.12 crore in the same quarter of the previous year. Additionally, revenue saw an 8.12% rise, amounting to ₹734.86 crore, up from ₹679.68 crore in the June 2023 quarter. This growth reflects the company’s ability to enhance profitability and maintain a steady increase in revenue.
Here’s a table summarizing Suprajit Engineering Limited’s financial results for the quarter ended June 2024:
| Metric | Q1 FY2024 (June 2024) | Q1 FY2023 (June 2023) | Growth |
|---|---|---|---|
| Net Profit | ₹38.14 crore | ₹33.12 crore | 15.16% |
| Sales | ₹734.86 crore | ₹679.68 crore | 8.12% |
The revenue growth has been driven by both domestic and international sales, showcasing the company’s competitive edge and market demand for its products.
Important Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | ₹7,465 Cr. |
| Current Price | ₹539 |
| High / Low | ₹566 / 353 |
| Stock P/E | 43.3 |
| Book Value | ₹98.4 |
| Price to Book Value | 5.48 |
| Dividend Yield | 0.20% |
| ROCE (Return on Capital Employed) | 13.9% |
| ROE (Return on Equity) | 12.9% |
| Face Value | ₹1.00 |
| Industry P/E | 34.4 |
| Debt to Equity Ratio | 0.52 |
| Return on Assets | 6.62% |
| EBIT | ₹290 Cr. |
| Industry PBV (Price to Book Value) | 3.76 |
| EV/EBITDA | 20.4 |
| EPS (Earnings Per Share) | ₹12.4 |
Shareholding Pattern
Here’s a table summarizing the shareholding pattern of Suprajit Engineering Limited for June 2024:
| Category | Shareholding Percentage |
|---|---|
| Promoters | 44.62% |
| FIIs (Foreign Institutional Investors) | 5.82% |
| DIIs (Domestic Institutional Investors) | 16.94% |
| Public | 32.64% |
Promoters hold a significant stake in the company, which is often seen as a positive indicator of their confidence in the company’s long-term growth potential.
Buyback Details
The buyback plan announced by Suprajit Engineering involves repurchasing up to 15,00,000 equity shares at a price of ₹750 per share. This buyback price is almost 38% higher than the closing price on Wednesday. This buyback represents approximately 1.08% of the company’s total outstanding shares and amounts to a total value of ₹112.5 crore. It will be conducted through a tender offer, which allows shareholders to tender their shares at the specified price within a designated time frame.
The record date for determining the eligibility of shareholders to participate in the buyback is August 27, 2024. Shareholders who hold shares as of this date will be eligible to tender their shares in the buyback.
Read the full details here – Official Notification
Implications of the Buyback
The decision to buy back shares is often a strategic move by companies to optimize their capital structure, return excess cash to shareholders, and signal confidence in the company’s future. In the case of Suprajit Engineering, the buyback serves several purposes:
- Enhancement of Shareholder Value: By reducing the number of shares outstanding, the company aims to increase the earnings per share (EPS), which can potentially lead to an appreciation in the share price.
- Efficient Capital Allocation: The buyback allows the company to utilize its surplus cash in a manner that benefits shareholders directly. This can be particularly appealing to investors seeking returns in the form of capital gains rather than dividends.
- Positive Market Signal: A share buyback is often interpreted as a sign that the company’s management believes the shares are undervalued. It sends a positive signal to the market about the company’s financial health and growth prospects.
- Improved Return on Equity (ROE): By reducing the equity base, the buyback can lead to an improvement in the company’s return on equity, making the company more attractive to investors.
Also Read – Bondada Engineering Announced the Stock Split Date
Conclusion
The buyback announced by Suprajit Engineering Limited is a clear indication of the company’s strong financial position and management’s confidence in its future growth. For shareholders, the buyback offers an opportunity to realize value either by tendering their shares at a premium or by holding onto a potentially more valuable stake in the company.
This buyback is expected to positively impact the company’s share price and overall market perception, making it a noteworthy event for both existing and prospective investors. As with any investment decision, it is essential for shareholders to consider their individual financial goals and consult with a financial advisor to determine the best course of action.
In conclusion, Suprajit Engineering’s buyback is not just a financial maneuver but a strategic initiative that aligns with the company’s long-term growth objectives and commitment to enhancing shareholder value.
Disclaimer: This information is for educational purposes only and does not constitute financial advice. Always conduct your own research and consult with financial professionals before making investment decisions.