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Gandhi Special Tubes – Buyback aimed at effective utilisation of surplus cash on balance sheet and rewarding shareholders

Event check:

The company is currently executing a buy-back amounting to ₹ 42 crore at a price of ₹ 550/share

Impact on shares:

At 100% buyback completion, around 6% of equity share capital will get extinguish thereby raising proportionate earnings per equity share.
Our Perspective:
We advise investors to tender in the said buyback wherein promoters have also expressed their desire to participate. Gandhi Special Tubes manufactures small diameter welded and seamless steel tubes that primarily find application in farm equipment (tractor), construction equipment and commercial vehicle (CV) space among others. Given the specialised nature of product profile, GST realises high EBITDA margins (~40%) with resultant high capital efficiency (RoIC at ~50%). It has a unlevered Balance Sheet with surplus cash of ~₹ 100 crore (~15% of MCap).

 

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