Reliance Industries Ltd (RIL) has proposed to extend its buyback programme for another year, for an amount of Rs 1,100 crore, at a maximum price of Rs 303 per share. RIL proposes to implement the buy-back programme through open market purchases.
A RIL release said: "Reliance's share buyback programme has been successful in creating a floor price, without deployment of any funds as yet."
The company had taken shareholders' approval to a similar buy-back programme last year, and would be placing a similar resolution at its forthcoming AGM for shareholders' nod.
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"The RIL share price dipped below the maximum specified buy-back price of Rs 303 on only 11 days in more than a full year and 264 trading days," the RIL release adds.
RIL claims that its share buy-back programme last year achieved its objectives of reduction in volatility, lowering of beta, and elimination of speculative pressures.
The volatility of RIL's share vis-a-vis the Sensex as measured by its beta has declined from a high of around two a few years back, and from a level of 1.16 at the time of announcement of the buy-back last year, to the range of 0.8 currently.
The company expects, the extension of the buy-back programme to result in further reduction in volatility, which is of great significance at this juncture as the RIL stock is among the most likely for selection for options trading in individual stocks.
The company in its annual report for 2000-01 has stated, RIL had not bought back any of its shares in those limited number of days when the share price was lower than the maximum specified buy-back price, as the share was consistently outperforming all benchmark indices by a wide margin.