In one of the biggest buybacks so far, the Mukesh Ambani-led Reliance Industries Ltd (RIL) has bought back 35.1 million shares, for Rs 2,512 crore, from its public shareholders.
With this buyback, RIL has taken over Piramal Healthcare which had repurchased 41.8 million shares, or 20 per cent of its total number of shares, for Rs 2,508 crore in March 2011.
RIL had launched its share buyback programme this February. According to data available with the exchanges, the company has finished buying back 35.1 million shares from the secondary market between February 14 and July 13—around one-fourth of the announced buyback of 120 million shares.
| BUYING BIG Some major buybacks in the recent past | |
| Company | Amount (Rs crore) |
| Reliance Industries | 2,512 (so far) |
| Piramal Healthcare | 2,508 |
| Reliance Infra | 795.5 |
| Hindustan Unilever | 626.2 |
| Hindustan Unilever | 625.3 |
| GTL | 258.8 |
| Source: BS Research Bureau | |
RIL increased its activity on the buyback window as its stock started to slide below Rs 750. RIL announced on January 20 the Rs 10,440-crore buyback plan, its first and largest in seven years. Citigroup Global Markets and DSP Merrill Lynch are the managers for the offer. According to Sebi norms, a company is allowed to buy back up to 10 per cent of its net worth within one year of resolution.
RIL had announced a buyback plan with an aim to pumping up its share value. RIL shares have underperformed the markets. The stock is at present trading around 720 level, much below the maximum price of Rs 870 per share fixed for the buyback. RIL closed at Rs 720.3, marginally up, on BSE on Monday.
RIL had in January announed it would buy back up to 120 million shares at a maximum value of Rs 10,440 crore from the open market, its first share buyback since 2005 and the biggest ever in India.
"It is not a surprise that RIL has been able to manage this. I am not too sure if the script will react to this. The street is sceptical regarding RIL's exploration and production business. Performance for this quarter is also going to be muted. With the kind of cash pile RIL is sitting on, it needs to address this. Its performance has been average. Buying back of shares will not impact the script," said the assistant vice-president, research, at a domestic securities firm.