The share buyback programme of Reliance Industries Ltd (RIL), the largest ever by an Indian company, is set to end on Saturday. Till yesterday, RIL had bought back shares worth Rs 3,360 crore from the open market, about a third of the targeted Rs 10,440 crore.
The buyback, launched on February 7, 2012, was aimed at purchasing shares as long as the stock stayed below Rs 870.
According to analysts, so far, RIL has brought back about 46 million shares at an average price of about Rs 730 a share. On Thursday, the RIL stock closed at Rs 889.65 on the BSE, a rise of 3.4 per cent over the previous close.
“The purpose of the buyback was price stability and ensuring investor confidence in the stock. The company has achieved this,” said S P Tulsian, an independent analyst who tracks RIL closely.
Fund managers said the share buyback was handy at a time when investor confidence in the company’s fundamentals was waning, amid a decline in natural gas production from its eastern offshore Krishna Godavari-D6 fields. “I don’t think the end of the share buyback programme changes anything for the company. It was a good source of support when the outlook for the stock was pessimistic,” said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance. “Now, stronger fundamentals have taken over and we expect these to improve,” he added.
“When the stock fell below Rs 700, the company was an aggressive buyer, thereby supporting the stock,” said an analyst who tracked RIL.
Since September 1, when the broader market recovered after various pro-business measures, the stock has gained 16 per cent, compared to the Sensex’s 14 per cent rise.
“The recent rally in RIL has been driven by a possible increase in gas price ($8-8.5/million British thermal units) and E&P approvals to restart drilling activities,” said BNP Paribas Securities’ analysts Amit Shah and Sriram Ramesh in a note released on Thursday. “We acknowledge the recent rally isn’t fully unwarranted, but an upside from here is hard to justify, especially as the refining and petchem businesses are not showing any sustainable reversal trend,” they said.
They retained their ‘hold’ rating on the stock and the price target of Rs 795 a share.
| VALUE PLAY Some of the buybacks of 2012 | ||||||
| Company name | Offer data | Buy back details | Total buyback Till date | |||
| Open 2012 | Close 2013 | Price(Rs) | Shares (lakhs) | Amt(Rs Cr) | ||
| Zee Entertainment | Apr 23 | 3-Apr | 140.00 | 200.00 | 280.00 | 1028974 |
| JK Lakshmi Cem | Mar 26 | 6-Feb | 70.00 | 139.00 | 97.50 | 120 |
| Sasken Comm Tec | 21-May | 22-Apr | 180.00 | 58.00 | 86.48 | 207187 |
| ECE Industries | 18-Apr | 27-Mar | 125.00 | 6.90 | 86.25 | 1976 |
| Allcargo Logistics | 11-Jul | 19-Jun | 142.50 | 52.63 | 75.00 | 510863 |
| Kirloskar Oil | 5-Mar | 24-Jan | 170.00 | 43.31 | 73.62 | 7 |
| FDC | 3-Sep | 16-Aug | 110.00 | 62.50 | 68.56 | 25000 |
| Kanoria Chem | 4-Sep | 7-Aug | 42.00 | 120.00 | 50.40 | 7124846 |
| Rain Commodities | 22-Oct | 25-Mar | 46.00 | 127.00 | 46.00 | 411683 |
| Mastek | 26-Nov | 13-Oct | 175.00 | 32.00 | 36.00 | 760299 |
| Vardhman Acrylic | 29-May | 8-May | 12.50 | 200.00 | 25.00 | 326917 |
| Selan Exploration | 17-Oct | 13-Sep | 350.00 | 5.78 | 20.23 | 26524 |
| LKP Finance | 18-Jun | 28-May | 80.00 | 32.69 | 12.40 | 6501 |
| Tips Industries | 23-Aug | 24-Jul | 90.00 | 16.00 | 8.00 | 3618 |
| Source Capitaline | ||||||
