Bharat Electronics on Tuesday said it has bought back 1.66 crore shares for Rs 2,171 crore in a filing to stock exchanges as a part of a share buyback offer which began on October 6, 2016.
In July this year, the company’s board had approved a proposal to buy back shares, subject to the approval of shareholders, for an aggregate amount not exceeding R2171 crore at a price not more than R1305 per share through a tender offer.
The company said, post buyback, the promoters holding in the company declined to 74.41 % from 75%, while public holding has decreased to 6.36 % from 6.62 %.
On Tuesday, the stock was up by 0.04 % at R1328.85 on the BSE. A combined 6.21 lakh shares changed hands on the counter on the BSE and NSE on Tuesday.
The company has cash and equivalents of R7,553 crore as on March 31,2016 . In May, the Department of Investment and Public Assets Management (DIPAM) directed public sector undertakings (PSUs) having a net worth of at least R2,000 crore and cash and bank balance of over R1,000 crore to buy back their shares.
The government had set a divestment target of Rs 56,500 crore for FY 17 in the Union Budget on February 29, 2016. The BSE PSU has risen by 39% from the day of the Union Budget. The benchmark Sensex has gained 20.3 % during this period.
According to Securities and Exchange Board of India (SEBI) rules a company can buy back shares either from its existing shareholders on a proportionate basis through a tender offer, the open market or odd lot holders.
In the case of a tender offer, the company has to deposit 25% of the consideration in the escrow account if the consideration does not exceed Rs 100 crore.
Companies offer buybacks to enhance their value since the shares bought back are extinguished and the earnings per share (EPS) gets a boost.