Atul Buyback: Prabhudas Lilladher Gives Buy For Rs 7800 TP; How To Apply For Buyback? Zerodha Explained

Brokerage Prabhudas Lilladher believes specialty chemicals stock Atul Ltd has recorded a decent correction from its higher levels of Rs 10,600. Now the stock is below Rs 7,000 and is in focus for its Rs 50 buyback shares which will close in February next year. The brokerage has recommended a positional buy in ATUL share price.

On Friday, ATUL's share price ended at Rs 6751.30 apiece, down by 1.75% with m-cap of Rs 19,975.11 crore. This share price level is lower by 9.98% from its buyback price.

Nevertheless, in the trading week that ended on December 8th, ATUL's share gained by nearly 2%. The stock has witnessed significant consolidation in 2023, as its YTD performance is down by over 17% on BSE. In a year, the stock slipped by nearly 19%. However, in 5 years of growth, the stock is a multi-bagger with an upside of more than 100%.

Earlier this week, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has made a decent correction from the higher levels of 10600 to 6400 where it has taken support multiple times and has almost made a triple bottom formation pattern in the daily chart. The RSI indicator also is recovering from its oversold zone and hence we recommend a positional buy in this stock for an upside target of 7800 keeping a stop loss of 6300."

Taking into consideration, the current price level and Parekh's target price, ATUL has a potential of nearly 16% upside in the medium term. Also, this target price is up by 4% from its buyback floor price.

ATUL launched its buyback on November 21, for which bidding will continue till February 23, 2024. The buyback comprised up to shares worth Rs 50 crore at a price not exceeding Rs 7,500.

Nuvama Wealth and Investment is appointed as the BSE Trading Member through whom the purchases of shares and settlement on account of the buyback would be made.

As per the latest filing, the cumulative amount utilised on Buy-back till December 08, 2023, is to the tune of Rs 9.5 crore compared to buyback size of Rs 50 crore. ATUL's buyback is through an open market.

How to apply for the buyback through the open market? Here's how Zerodha explained on its website:

Buyback is a process through which a company can buy back its shares from existing shareholders. Currently, the same can be done through a Tender offer or Open market.

As per NSE FAQS, Buyback through the Open market is a process where the company appoints a member/broker to place buyback orders during the buyback period on behalf of the company in the Equity market. The buyback window is allowed only in the Capital Market Segment for the open market. All the existing shareholders of the company shall be eligible to participate in the Buyback process via the open market.

According to Zerodha's website, to participate in a buyback through the open market and sell shares directly to the company on Kite, search for the name of the stock followed by BO for NSE or 7 for BSE.

For instance, if ATUL is actively buying stocks through the open market in a buyback on BSE, clients can search for ATUL-7 in the search bar and place a sell order to sell their shares directly to ATUL7.

Notably, the buyback through the open market can only be conducted between 9:45 AM to 3:00 PM. Clients can only sell shares in the BO or T series (ending with 7), as buying is not allowed. The buyer in this series is always the company conducting the buyback. Also, selling is only permitted for shares that have been settled in the trading account. T1 holdings or shares that are yet to be settled in the trading account cannot be sold.

How to apply at Zerodha?

- Visit console.zerodha.com/dashboard.
- Click on Portfolio and then Corporate Actions.
- Hover on the stock, select Options and click on Place Order.
- Enter the number of shares and click on Submit.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.