Asserting that its shares are undervalued at current levels, Anil Ambani-led Reliance Infrastructure on Monday announced a Rs 1,000 crore (Rs 10 billion) share buy-back offer to buy 8.34 per cent shares from public shareholders.
Under the offer, the company will repurchase up to 1.38 crore shares from non-promoter shareholders for a maximum price of Rs 725 a piece.
At the BSE, the scrip was trading at Rs 664, up 2.05 per cent from the previous close.
Commenting on the offer, a Reliance Infra spokesperson said that the buy-back for up to Rs 1,000 crore through open market purchases would begin on April 5.
In a mandatory public announcement to launch the buy-back offer, the company said that the offer was approved by its board on February 14.
"The proposed buy-back is being implemented in keeping with the company's desire to enhance overall shareholder value. It is expected to contribute to the overall enhancement of shareholder value without comprising the pursuit of high growth opportunities of the company," Reliance Infra said.
"The share buy-back is expected to reduce short-term volatility in the company's share price, deter speculative activity in the company's share price, send a strong signal to the capital markets on the perceived under-valuation of the company's share price and reiterate the confidence of the management in the future growth prospects of the company," it added.
According to market experts, the proposed buy-back may have a positive impact on the company's stock price. It will also reduce the number of outstanding shares, increasing earnings per share and improve return on net worth.
As per the offer, the company would repurchase a minimum of 34.48 lakh shares and maximum of 1.38 crore shares from shareholders for a maximum price of Rs 725 a piece.
The company has done three buy-backs for an aggregate amount of Rs 923 crore (RS 9.23 billion).
