GAIL hits 52-week high ahead of record date for share buyback

Shares of GAIL (India) hit a 52-week high of Rs 173.45, up 3 per cent on the BSE in Tuesday's intra-day trade, ahead of ex-date for share buyback on Thursday, April 21, 2022.

The stock of state-owned gas transmission and marketing company surpassed its previous high of Rs 171.35 touched on October 6, 2021. In the past one month, it has outperformed the market by surging 15 per cent, as compared to 1 per cent decline in the S&P BSE Sensex.

The board of directors of GAIL (India) on March 31, 2022 had approved a buyback of 57 million shares at Rs 190 apiece aggregating to Rs 1,083 crore. The buyback is being done through the tender route-- this will allow the government, which holds 51.8 per cent stake, to participate in the process. GAIL has said the buyback is for 2.5 per cent of its paid- up capital and free reserves as on March 31, 2021.

The Company has fixed Friday, April 22, 2022 as the record date for the purpose of ascertaining the eligibility of shareholders for Buyback of equity shares.

GAIL (India) said the Buyback would help in optimizing the capital structure and improving return on equity, by reduction in the equity base, thereby leading to long term increase in shareholders' value. The Company believes that this reservation of 15 per cent for small shareholders would benefit a large number of public shareholders, who would get classified as “small shareholder”.

"The funds for the Buyback will be met out of internally generated cash resources of the Company. The Company does not intend to raise additional debt for the explicit purposes of the Buyback. This Buyback is not likely to cause any material impact on the earnings of the Company, except for the cost of financing the Buyback, being a reduction in the treasury income that the Company could have otherwise earned on the funds deployed," the company said.

GAIL (India) is the largest integrated Natural gas marketing and Transmission Company having its presence along entire natural gas value chain comprising Gas transmission and marketing, LPG Transmission, gas processing, petrochemicals, LNG imports, Exploration & Production and City Gas Distribution. The Company has also embarked upon alternate energies like green hydrogen, renewables and bio-fuels projects which are of national importance and would likely provide a transition to the future.