India Inc bought back shares worth Rs 3,000 crore from public shareholders through the repurchase programme last year, achieving just about 34 per cent of the targeted amount.
In all, 33 buybacks were concluded with a total acquired amount of Rs 3,023 crore in 2014, as against the offered amount of Rs 8,939 crore — achieving a target of 34 per cent, according to Prime Database.
In comparison, 27 buyback programmes were completed in 2013 worth Rs 6,892 crore. This was against the target to repurchase shares worth about Rs 14,415 crore from the public shareholders. Thus achieving a target of 48 per cent.
Market analysts attributed the reason for decline in the number of companies achieving the full target to surge in the market barometer, with the BSE Sensex surging by 30 per cent in 2014.
“Strong, buoyant secondary market which led to an increase in stock prices which acted as a deterrent for buybacks,” Prime Database Managing Director Pranav Haldea said.
The largest buyback completed was by Cairn India for Rs 1,225 crore. However, the company had set a target to repurchase shares worth about Rs 5,725 crore from the public shareholders.
Buyback of shares means repurchase of outstanding shares using surplus cash in the balance sheet of a company.
It results in a reduction in share capital to the extent shares bought back. The move also leads to an increase in promoter holding and improvement in earnings per share for the future period.
In the share repurchase programme, shareholders can participate either through the tender offer route or by selling shares in the open market as may be decided by the company.
As per Sebi’s new norm, the buyback period was restricted to six months from 12 months.
Out of total 33 buyback programme, 28 of these were through the stock exchange mechanism and the remaining five were via tender route.
In terms of buyback offers which opened in 2014, there were 16 to buy shares to the tune of Rs 6,891 crore; 15 of these offers have closed till now and one offer is still currently open.
The offer amount in these 15 offers was Rs 6,841 crore and the acquired amount was Rs 1,975 crore.