Sun Pharma is buying back Rs 675 crores of stock at Rs 900/share - over 15% premium to current prices.
That's a great indication of the confidence the promoters have in the prospects of the company, and a great way to enhance returns to all shareholders. That decreases shares outstanding by 0.3%, and therefore increases earnings yield by the same amount.
But more importantly, this open offer transcends the F&O expiry in September - because it is open from Sep 22 to Oct 5. The expiry is on Sep 29th, one week after the start of the open offer.
If you submit your shares into the open offer before the 29th, you won't have them available for sale - and this could actually boost share prices on expiry. Plus the typical positive sentiment associated with a share buyback. Plus anyone buying shares in the expiry can also submit those shares in open offer!
Unlike Coal India, this is a real buyback - with a 15% premium, so could be tempting to some shareholders - especially those who are sitting on Sun Pharma from higher levels, and therefore not concerned about the Capital Gains implications (Open offer doesn't suffer STT, therefore no benefit of Zero long term capital gains taxes).
That's a great indication of the confidence the promoters have in the prospects of the company, and a great way to enhance returns to all shareholders. That decreases shares outstanding by 0.3%, and therefore increases earnings yield by the same amount.
But more importantly, this open offer transcends the F&O expiry in September - because it is open from Sep 22 to Oct 5. The expiry is on Sep 29th, one week after the start of the open offer.
If you submit your shares into the open offer before the 29th, you won't have them available for sale - and this could actually boost share prices on expiry. Plus the typical positive sentiment associated with a share buyback. Plus anyone buying shares in the expiry can also submit those shares in open offer!
Unlike Coal India, this is a real buyback - with a 15% premium, so could be tempting to some shareholders - especially those who are sitting on Sun Pharma from higher levels, and therefore not concerned about the Capital Gains implications (Open offer doesn't suffer STT, therefore no benefit of Zero long term capital gains taxes).
Sun Pharma - interesting situation!
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