Dear Readers,

Suddenly a lot of listed Indian companies with Japanese promoters are opting to de-list from Indian exchanges.

A few months back Denso India got delisted, in Nov’13 Ricoh India came up with an unprecedented 2nd de-listing offer and towards the end of Nov’13 DIC India came up with a de-listing offer.

We did some analysis recently and believe 2 more companies are likely to come up with de-listing offer in next few days.

DIC India de-listing opportunity was shared with Alpha + members on 26th Nov’13 when the stock was quoting around 330 and we recently booked profits around 395-400 levels on 2nd Jan’14.

We keep recommending such Special situation opportunities to Alpha + members as these are to a certain extent immune from the regular market risks and volatility. Also, they act as temporary parking places for cash waiting to be invested in high-quality businesses.

For those interested in participating in DIC India de-listing opportunity, we have produced below the detailed note shared with Alpha + members.

25th Nov’13: Alpha plus – DIC India de-listing opportunity

Dear Sir,

We would like to bring to your notice a Special situation opportunity on the proposed de-listing of DIC India Ltd (NSE Code: DICIND; BSE Code: 500089)

Note: Please read the entire note to make an independent assessment of the risk reward ratio in this opportunity.

Investment strategy: Start with 5% portfolio allocation in the price range of 330-340

DIC India (NSE: DICIND) – Basic details

DIC India is a part of the World’s largest manufacturer of printing Inks and allied material, DIC Corporation of Japan. DIC Japan has a 71.75% share holding in DIC India Limited through DIC Asia Pacific Pte Ltd, Singapore.

DIC is the second largest player in the domestic inks industry. The company also operates in graphic arts business and offers printers supplies, machinery, pigments and reprographic products.

DIC commands around 25% market share (second to Micro Inks: around 35% market share) in India. The company has a strong customer base, which includes some of the big names in the printing industry. The company’s market position is underpinned by the technological support DIC receives from its parent DIC AP. DIC also derives significant advantage from DIC Japan because of latter’s global presence and market dominance.

De-listing offer from the promoters

On 22nd Nov’13, post market hours, DIC India informed exchanges that it has received a letter from promoters (DIC Corporation Japan) with a proposal to voluntary de-list the equity shares of the company from the exchanges.

Further, the promoters have indicated that they are willing to acquire the shares at a price of Rs 260/- per share (CMP – 235.5)

It’s important to note here that 260 is just an indicative offer price and the shareholders are free to tender their shares at a price in excess of 260. Also, in the past, the promoters have acquired shares at substantial premium to their indicative offer price.

Important points about this De-listing offer and the company


  1. It’s a voluntary de-listing offer as promoter shareholding is 71.75% i.e. less than maximum permissible 75% for listed companies.
  2. DIC India is a good company and fundamentally much better than some of our previous de-listing opportunities such as RBN, RICOH, Denso, etc.
  3. DIC is currently trading at a market cap of 216 crores against net worth of 290 crores (book value – 315). There’s just 35 crore short term debt on the books of the company.
  4. The average profit before tax for the past 4 years is 33 crores and average net profit for the past 4 years is 22 crores. Thus, the valuations are also reasonable at 10 times earnings and 0.75 times book value.
  5. The company has a good track record of dividends and its last dividend was Rs 4/- per share in Apr’13.


The promoter holding is 71.75%. At the end of Sep’13, 16.72% of the equity was held by 8,591 small shareholders. Thus, getting enough shares in reverse book building (RBB) for promoter holding to go beyond 90% and RBB to be successful will be difficult.

Rationale behind this opportunity

The rationale behind recommending DIC India is based on gains from the probable run up that may emerge on the announcement of de-listing offer with much lower risk at an indicative offer price of 260.

Also, as discussed above, DIC India is a much more fundamentally good company with the de-listing premium being absent in the current price range of Rs 330-340.

In fact, the book value of the company itself is Rs 315 and considering the past cases we expect the shareholders to tender their shares at decent premium (30-50%) to book value.


We are still some steps away from reverse book building, if the promoters backtrack on the de-listing proposal there would be a rush to exit from the stock and one may not be able to exit before the stock has corrected by 20-30%.

Secondly, if public shareholders do not approve the de-listing proposal with requisite majority the above mentioned scenario of 20-30% correction will pan out.

We would like to add here that the probabilities of both the above cases are extremely low; however one should still be aware of the risks involved as the resultant impact will be 20-30% loss.

Disclaimer: Alpha + members have invested in DIC India. This report is being shared only for the purpose of information; do not construe the same as investment advice. In case you invest in DIC India, please carry out your own due diligence.

In case of any queries, feel free to drop a mail or call us.


Best Regards,
Ekansh Mittal
Ph.: 0512-6050062, Mob: +91-9818866676
Email: [email protected]