Zydus Lifesciences bought back shares at ₹1,005 per share through a tender offer that ran from 29 February 2024 to 6 March 2024 (record date 23 February 2024), with the shares listed on the BSE, NSE. Shareholders on the register on 23 February 2024, the record date, were eligible to tender. The offer covered 59,70,149 shares, 0.59% of the equity, about ₹600 crore.
The buyback price was 25.3 percent above the closing price of ₹801.85 on 9 February 2024, the last close before the offer; a small shareholder could tender up to 199 shares within the two-lakh-rupee limit. Zydus Lifesciences Limited is a leading Indian Pharmaceutical company that offers healthcare services globally. The company manufactures formulations, APIs, vaccines, biosimilars, complex products (transdermals, topical etc.), animal health products as well as wellness products.
Zydus Lifesciences Limited has more than 30 manufacturing plants worldwide including India, Germany, Brazil & USA. Zydus Lifesciences Limited is the fourth largest pharmaceutical company in India. Zydus Lifesciences was formerly known as Cadila Healthcare Limited.
| Acceptance | Shares accepted | Profit |
|---|---|---|
| 33% | 65 | ₹13,204 |
| 50% | 99 | ₹20,111 |
| 75% | 149 | ₹30,269 |
| 100% | 199 | ₹40,426 |
Before brokerage and tax, on the maximum small-shareholder holding at the last close before the offer; the offer has since closed.
| Metric | 31-Mar-23 | 31-Mar-22 | 31-Mar-21 |
|---|---|---|---|
| Net Worth | 17,515.8 | 16,999.6 | 12,992.3 |
| Profit After Tax | 1,529.2 | 857.9 | 1,476.2 |
| Reserves & Surplus | 1,801.75 | ||
| Revenue | 9,553.5 | 8,160.6 | 7,869.3 |
| Total Borrowing | 1,163.2 | 4,196 | 4,583.5 |
The Buyback will help the company to distribute a part of the surplus cash to its shareholders holding equity shares thereby, optimizing returns to the shareholders and enhancing the overall shareholders' value in the longer term, and improving the return on equity.
In a tender offer the company fixes a price, usually above the market price, and invites every shareholder who held shares on the record date to offer some or all of them back. The entitlement ratio says how many shares you may tender for every share you hold, and because most offers are oversubscribed the acceptance ratio, the share of tendered shares the company actually buys, is known only after the offer closes.
Shares are tendered through your broker during the offer window; accepted shares are paid for at the buyback price and the rest return to your demat account within a few days of the close.
Fifteen percent of every tender offer is reserved for small shareholders, defined as those whose holding in the company was worth two lakh rupees or less at the market price on the record date. Because far fewer shares are tendered in that category, its entitlement ratio is usually much higher than the general category's, and that reservation is the reason retail investors follow buybacks at all.
The figures on this page show how many Zydus Lifesciences shares fit within the limit, what they cost at the last closing price, and what the profit would be at different acceptance ratios, before brokerage and tax.
Since October 2024 the amount a shareholder receives in a buyback is taxed as a dividend in their hands at their slab rate, and the cost of the accepted shares becomes a capital loss that can be set off against capital gains. That makes the after-tax result quite different from the headline premium, and for a shareholder in a high tax bracket a buyback with a modest premium can be worth less than selling on the exchange.
Work it through for your own bracket, or ask a tax adviser, before tendering.
₹1,005 per share, 25.3 percent above the closing price of ₹801.85 on 9 February 2024, the last close before the offer. The premium over the market price is what made tendering worthwhile.
23 February 2024. Shareholders had to hold the shares in their demat account on that date, which meant buying them by 22 February 2024 so that delivery settled in time.
The tender window ran from 29 February 2024 to 6 March 2024. Shares were tendered through brokers, and tender forms were accepted until 6 March 2024.
6/67: the company accepted 6 shares for every 67 held, about 9 percent of a small shareholder's holding, before any unaccepted shares from other categories were redistributed. The general category ratio was 2/395.
Up to 199 shares, which is the two-lakh-rupee small-shareholder limit divided by the buyback price of ₹1,005. At the closing price of ₹801.85 that holding cost about ₹1,59,568.
The offer closed on 6 March 2024. The company has not published the final acceptance ratio; the table shows what the profit would have been at 33 to 100 percent acceptance. At 33 percent the profit on a maximum small-shareholder holding would have been about ₹13,204; at 100 percent about ₹40,426, before brokerage and tax.
Accepted shares were paid for at ₹1,005 and unaccepted shares were returned to demat accounts by 14 March 2024.
For buybacks completed after 1 October 2024 the amount received is taxed as dividend income at your slab rate, and the cost of the accepted shares becomes a capital loss that can be set off against capital gains. Confirm the treatment for your own position with a tax adviser.