India Inc seems to be going slow on their buyback plans as the companies having begun their share repurchase programmes since the beginning of 2012 have acquired equity worth just about 7 per cent of the overall target in little over five months.
According to the information available with the stock exchanges,as many as 12 Indian companies began their respective share buybacks in 2012 for a collective amount of Rs 11,706 crore,but have so far bought shares worth an estimated Rs 839 crore so far.
These include Mukesh Ambani-led Reliance Industries (RIL) that began a buyback programme of Rs 10,440 crore early this year,but has so far purchased shares worth only Rs 643 crore — accounting for just about 6 per cent of the total amount earmarked for purchase of shares.
RIL shares today slipped to as low as Rs 700 a piece,which is much below the maximum price of Rs 870 per share fixed for the buyback plan.
The overall share buybacks,at about 7 per cent of targeted amount,have been slow despite the stocks of many of these firms trading considerably below the targeted buyback price.
According to market experts,most of the companies that have undertaken buyback are trading below their offer price and the promoters could step up their buying activities when the prices go down further.
Destimoney Securities MD and CEO Sudip Bandyopadhyay said,”All the companies are trading well below their buyback price still they are not buying back shares suggests that they are expecting that prices would go down further.”
“The success of buyback offers depends on many factors like willingness to buy the proposed shares and premium sustainability,” CNI research Head Kishor Ostwal said.
He added,”In fact,many corporate houses failed to utilise the entire corpus targeted for the purpose in past and many firms even discontinued buying activities despite shares were available well below maximum buyback price.”
Between February 14 and May 3,RIL has purchased 81.17 lakh shares for an average price of Rs 792 a piece.
RIL’s board had approved buyback of up to 12 crore shares or 7.22 per cent in January this year. The buyback which was opened on February 1,2012 would close on January 19,2013.
Interestingly,Monnet Ispat that started a Rs 100 crore buyback programme in mid-March has not purchased any shares till now,while Kale Consultants has almost completed its buyback activities. Another major buyback programme was launched by Indiabulls Real Estate. The real estate entity has acquired shares worth Rs 26 crore via open market transactions against the targeted buyback of Rs 450 crore.
Amtek Auto’s Rs 219 crore buyback programme,which took off in January,has spent 68 per cent of the targeted amount. The auto component maker has purchased back shares worth Rs 148 crore till now.
Besides,Zee Entertainment has bought back 2.55 lakh shares for Rs 3.24 crore since the launch in the last month. It has utilised only 1.16 per cent of the targeted buyback amount of Rs 280 crore.
In addition,JK Lakshmi Cements has acquired shares worth Rs 16 crore through buyback route against the target of Rs 98 crore,while Kale Consultants has purchased shares worth Rs 12.16 crore against Rs 13 crore set aside for the buyback programme.
Other players which have launched buyback programme are Valiant Communications,Ansal Housing & Construction,Kirloskar Oil Engines,Ece Industries and GeeCee Ventures Ltd.