India?s largest real estate firm, DLF, on Thursday announced a Rs 1,100-crore buy-back programme. The company said it would buy up to 2.2 million shares from the open market at a maximum price of Rs 600 per share, over a year, as approved by the board.
The company would pick up 1.3% of its shares from the market. This would raise the promoters stake in the company to 89.3% from 88.17% now. DLF also said it wouldn?t actively invest in land deals.
Rajiv Singh, vice-chairman, DLF, said, ?The company?s aim has always been to maximize shareholder value and we see the share-buyback decision as a highly attractive opportunity for our shareholders. This decision would be value accretive for the shareholders. While we respect the market, we believe that our current share prices do not reflect the intrinsic strength and future growth potential of DLF.?
The trend of companies buying back own shares to bolster shareholder confidence, by increasing the earning per share, seems to be catching up of late. As reported by FE earlier, buy-back programmes of at least half a dozen companies are open at the moment.
DLF?s scrip has seen an erosion of as much as 71% this summer. The scrip gained 1.79% on Thursday, closing at Rs 458.35.
Though some industry observers feel the buy-back could reduce the company?s cash reserves and tighten its liquidity, the company maintains that it has sufficient cash reserves and is facing no liquidity crunch.
Singh hinted that the company wasn?t going to dole out huge sums on acquiring land in the near future.