19 of the 27 stocks bought back are trading at a huge premium; some have also paid dividend
Shareholders who participated in buyback offers by various companies in the last one year have lost out as most of these stocks are currently trading at a huge premium to their average buyback price.
The promoters of 27 companies had bought back their company’s shares from the open market. Out of these, as many as 19 stocks are now drawing a premium to the average buyback price.
Reliance Infrastructure, DLF, India Infoline, EID Parry, Monnet Ispat and Supreme Industries are quoting at more than 80 per cent premium to their average buyback price; while Ipca Lab, Indiabulls Securities, HEG, GSS America Infotech, Mangalam Cement and Supreme Petrochem are trading at a premium of 50-80 per cent. Most promoters had bought back shares at a huge discount to their proposed buyback price after equity markets fell sharply. DLF, Monnet Ispat, Gujarat Flurochemicals, Surana Telecom, Sasken Communications had bought at over 50 per cent discount to the maximum buyback price.
These 27 firms spent Rs 1,018 crore to acquire 69.54 million equity shares. The current combined value of these is Rs 1,515 crore, 49 per cent more than the buyback value. The investors have not only missed the value appreciation but also the handsome dividend announced by these companies.
Crompton Greaves, GTL, Godrej Consumer Products, Geodesic and Zen Technologies did not go ahead with the buyback, though they had the approval of their boards for this. These stocks are currently trading at a premium to their proposed buyback price.
The shareholders of India Infoline who sold under the company’s buyback offer have been the biggest losers. The stock has jumped 244 per cent and was at Rs 145.19 at the close of trade on Wednesday compared with the average buyback price of Rs 42.17 per share. The company has declared a dividend of Rs 2.80 per share for 2008-09.
Reliance Infrastructure bought back 2.5 million shares at an average market price of Rs 509.64. The stock is drawing a premium of 153 per cent and is at Rs 1,188.20 on the Bombay Stock Exchange. DLF purchased 7.64 million shares at Rs 184.19 per share.
The stock has jumped 98 per cent to Rs 365.50.
