Dr Reddy Buy Back Offer at 15% Premium from CMP – Should you grab this opportunity?

Dr Reddy Buy Back Offer at 15percent Premium from CMPDr Reddy Buy Back Offer Review

Yesterday, Dr. Reddy has announced buy back of its shares to the tune of Rs 1,569 Crores. Dr Reddy buy back offer opens on 18th April, 2016. If we compare with current market price, it is 15% premium. How to apply for Dr Reddy Buy back offer? Should you grab this wonderful opportunity and get 15% by participating in this buy back offer? I would provide more insights about Dr Reddy's laboratories buy back offer and whether you should participate in this offer or not.

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Dr Reddy Buy Back Offer Details

The Hyderabad-based pharma major has set aside ₹1,569 crore for the share buyback which involves 14.9 per cent of the total paid-up share capital and free reserves of the company as on March 31, 2015.

  • Dr. Reddy’s buy back offer opens on 18th April,2016.
  • Dr. Reddy’s buy back would close within a period of 6 months.
  • Buy back offer at a maximum price of Rs 3,500 per equity share. The indicative maximum shares would be 44,84,049.
  • Buy back price of Rs 3,500 is at 15% premium to current market price of Rs 3,079.
  • Company has set aside Rs 1,569 Crores to buy back offer. Dr. Reddy’s got board approval in Feb and shareholder approval on 1st April, 2016.
  • The holders of the ADS may participate in the buyback by withdrawing ADS from the depository facility, acquiring equity shares upon such withdrawal and then selling those shares back to the company in the open market in India.
  • Company can buy back upto 25%  of paid up capital. Dr. Reddy’s current buy back offer of Rs 1,569 Crores would be 14.9%.
  • Dr.Reddy feel that it can use surplus cash effectively with this buy back of shares.
  • Dr. Reddy’s current have over Rs 2,500 Crores of reserves. Buyback will result in a reduction in the number of shares accompanied by a likely increase in earnings per share and return on capital employed.
  • Promoter and promoter shareholding will increase to 26.28 percent from current 25.58 percent after completion of buyback offer.

How to apply for Dr Reddy Buy back offer?

You can log in to your demat account and visit buy back offer / IPO / FPO section (depends on your demat account menu options). You would find Dr. Reddy’s buy back offer. You can select the option and input the no. of shares which you want to sell and submit it. Dr Reddy’s laboratories would provide cut-off date till which they would be accepting this offer. After this cut-off date, Dr Reddy’s would close this buy back offer and confirm whether they were able to purchase your shares or not.

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Can we buy now at low and participate in buy-back offer?

Now, you would have thought that we can buy at current market price and participate in buy-back and grab 15% differential price right? It may not be that simple. While you can purchase them from open market and participate in this buy back offer, Dr. Reddy’s would buy back only to the tune of 44.84 Lakh shares, at maximum of Rs 3,500 per share.  Means if it is oversubscribed (which generally happens), these would be purchased proportionately and balance would not be accepted (in other means, would be returned). If you are holding Dr. Reddy’s shares, you should go ahead and participate in this buy back offer. If you want to take some risk and grab this opportunity, you can still purchase them from open market and  participate in buy back offer. However you should know that there is no guarantee that your shares would be purchased by them.

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Dr Reddy Buy Back Offer at 15% Premium from curent market price


  • Kshama Jain

    Very informative article. I visited one more website Ask Kuber that provide long term Stock Research Recommendations. Their objective is Portfolio return should exceed broader stock market indices with lower risk than broader market in long run.

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