Behold companies that are aggressively buying back shares
A share buyback is simply a corporate action where the company buys back its shares. It is done either through buying in the open market or through a tender offer. In the tender offer, the common shareholders can submit their shares, in return, they usually get a premium over the current market price of the stock.
In India, the buyback trend had picked up pace only in recent times from fiscal 2017. According to Prime Database, 61 companies bought back shares worth Rs 39,295 crore in FY21, and in FY22 16 have bought back shares worth Rs 10,606 crore as of September 14, 2021. The highlighted player in the buyback is software giant Infosys.
Let's look at the top five buybacks in recent times.
This IT giant had announced a buyback of shares worth Rs 9200 crore on June 25, 2021. The board has approved an open market buyback with a price not exceeding Rs 1750. The stock closed at Rs 1574.45 on June 25. The buyback was completed on September 9, as it exhausted the allocated amount. During the period the stock rallied by nearly 8 per cent, and also created a new 52-week high of 1755.6 in August end.
eClerx Services Ltd
Another major buyback came in from eClerx of an amount not exceeding Rs 303 crore. The buyback size was 20.59 per cent of the consolidated total paid-up equity capital & reserves of the company. It was done through a tender offer with a specified price of Rs 3200 per share. The announcement was made on August 13, 2021, and the buyback record date is August 27. The stock is trading at 2353 as of September 15. You must have eClerx shares in the Demat account as on record date to be eligible for the tender offer.
Balrampur Chini Mills Ltd
Balrampur Chini Mills Ltd, which is one of the largest sugar-producing companies in India, announced a buyback amounting to Rs 225 crore at a price not exceeding Rs 410 through open market purchase. It was announced on August 9 and the stock is currently trading at Rs 359 as of September 15, 2021.
Star Cement Ltd
The largest cement manufacturer in northeast India, announced the buyback on August 13, amounting to Rs 123 crore through a tender offer. The buyback offer size is 5.9 per cent of the consolidated total paid-up capital & reserves of the company. The specified price is Rs 150, and the record date was August 25.
Kaveri Seed Company Ltd
One of the fastest-growing seed companies in India, Kaveri Seed announced the buyback of shares worth Rs 120 crore in the open market, which it announced on August 25. The buyback size is almost 11.47 per cent of its consolidated total paid-up capital & reserves. The maximum buyback price is Rs 850 per equity share.