The country's most-valued firm Reliance Industries (RIL) today announced a buyback of shares worth up to Rs 10,440 crore from the public in what would be largest such programme in the history of the Indian capital market.
RIL would buy back up to 12 crore equity shares worth Rs 10,440 crore from the open market at a maximum price of Rs 870 apiece in its first share buyback since 2005.
"The board of directors of RIL at its meeting held today unanimously approved the buyback of up to 12 crore fully paid equity shares at Rs 10 each, at a price not exceeding Rs 870 per equity share, up to an aggregate amount not exceeding Rs 10,440 crore, from the open market through the stock exchanges," the company said in a statement.
Market analysts were, however, disappointed by the size of the buyback, which represented 3.7% of the company's equity capital. RIL had in December, 2004, offered to buy back 10% of its equity at Rs 570 per share.
The analysts said the share buyback -- coming after a gap of about seven years for RIL shareholders -- could be aimed at helping the stock regain its lost glory, given their sharp plunge of 35% last year, as against a fall of about 24% in the market benchmark Sensex.
"It is reasonable to expect that this will be largest-ever buyback programme in the history of the Indian capital market," said SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla.
"Assuming an about 10% premium, the company may choose the maximum buyback price in the range of Rs 850-900 per share," he added.