DLF makes buyback offer at Rs 600 a share

Reliance Infra1,600 Great Offshore750 Mastek750 Abbott India630 DLF600 ICI575 Gujarat Flurochem300 Sasken Comm260 ANG Auto215 SRF160 Goldiam Int'l85 JB Chemicals70 Surana Telecom50  The company is planning to buy a maximum of 22 million equity shares or 11 per cent of the 202 million shares held by the public. After the buyback, the promoters' shareholding in the company will go up to 89.4 per cent from 88.2 per cent now. The New Delhi-based company will buy back the shares using its own money.  "We were expecting the buy-back at around Rs 700. Given the fact that the company got listed at Rs 570 a year ago, Thursday's buyback announcement at Rs 600 is not a big deal," said Shailesh Kanani, analyst with Angel Broking.  DLF's buyback offer comes after the company's stock fell nearly 63 per cent from its all-time high of Rs 1,225 on January 15. The real estate biggie's shares rose more than 6 per cent after the company announced its buyback plans on July 2.  Though the buyback is expected to stabilise the firm's falling stock in the short run, analysts are disappointed with the move as they don't see it to be beneficial for shareholders.  "The pricing is also not great. I do not think the buyback is going to benefit shareholders," said Arun Kejriwal of Kejriwal Research and Investment Services. "There is hardly any room for the company to buy back since it is on the threshold of the maximum promoter holding of 90 per cent," he said  "DLF shares rose only about 2 per cent on Thursday which suggests that shareholders are not greatly enthused with the announcement," Kejriwal added.  Still, some analysts believe that by announcing the buyback, DLF is showing its financial strength.  Suman Memani, research analyst with Religare Securities, believes that the company's total buyback amount of Rs 1,100 crore shows that the company is not facing any major credit crunch. This is at a time when developers in most of the countries are finding it difficult to cope up with poor sales, rising input costs and higher lending rates.  "I believe that the buyback is at quite a premium and may stabilise the stock at a particular level. The stock will not go below Rs 420 now as the company will buy the shares from the market," Memani said.  The biggest ever open market buyback offer of Rs 2,000 crore was made by Anil Ambani group company Reliance Infrastructure in 2008. Although, Mukesh Ambani's Reliance Industries made an open market buyback offer of Rs 1,100 crore in 2001, it never bought back any share as its market price always remained above the company's floor price.