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RIL share buyback closes and gets 38pct of target
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Tuesday, 22 Jan 2013

PTI reported that Reliance Industries has bought back shares worth over INR 3,900 crore from public shareholders through an about year long share repurchase program, achieving just about 38% of the target.

The share buyback program, the largest ever by an Indian company, concluded yesterday, but the final figure might change as the data has been disclosed on the stock exchanges only for shares bought back till January 16th.

Billionaire industrialist Mr Mukesh Ambani led Reliance Industries Ltd began the buyback program on February 7th 2012, with a target to repurchase shares worth about INR 10,440 crore from the public shareholders. The company had offered to buy back the shares at a price of up to INR 870 each under the program.

The company said that the buyback of equity shares, as approved by its board of directors on January 20th last year, closed on January 19th, 2013, but did not disclose the final tally.

According to data available with the stock exchanges, RIL bought back about 4.62 crore shares, estimated to be worth INR 3,951 crore, till January 16th.

The buyback program had begun on a slow pace, but gained some momentum in May 2012, when the stock price fell below INR 700.

The program was announced with an aim to shore up the value of RIL shares, which had underperformed the markets in 2011. However, the stock has gained nearly 15% in the past one year, but it is still lower than the gains registered by the market benchmark index Sensex.

Currently, the stock is trading near INR 900 level, which is much higher than the maximum price of INR 870 per share fixed for the buyback.

Market analysts believe the purpose of the buyback was price stability and ensuring investor confidence in the stock, which the company has successfully achieved.

According to Mr Kishor Ostwal, CNI Research Head, the success of buyback offers depends on many factors like willingness to buy the proposed shares and premium sustainability.

Mr Ostwal said that “In fact, many corporate houses failed to utilize the entire corpus targeted for the purpose in the past and many firms even discontinued buying activities despite shares being available well below maximum buyback price.”

Source - Business Line


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