REL to mull buyback of shares on March 5

Written by Agencies | Agencies | Mumbai, February 26: | Updated: Feb 26 2008, 18:45pm hrs
In a move aimed at arresting the slide in its scrip and reassure investors about the growth potential, Anil Ambani group's Reliance Energy Ltd on Tuesday said it will consider buyback of shares at a meeting next month.

"A meeting of the board of directors of the company will be held on March 5 to consider buy back of equity shares of the company," Reliance Energy said in a communique to the Bombay Stock Exchange.

The company, however, did not reveal how many shares it proposes to buy back or at what price. When contacted, an ADAG spokesperson declined to reveal the purpose of the buy back.

Shares of Reliance Energy were trading at Rs 1,682, up 3.65 per cent from Mondays close of Rs 1622.70. The scrip, which had closed at Rs 1,963.25 on February 8, has taken a beating since the listing of Reliance Power on February 11. "The significance (of the buyback) is that promoters are sending a message to investors that they are bullish about the business and they don't see the rate of shares going down below that level," Globe Capital Market Ltd Managing Director Ashok Aggarwal said.

The Anil Ambani group had, only on February 24, announced a bonus issue for shareholders in its newest listed firm Reliance Power, which has been trading below issue price of Rs 450. It was quoted at Rs 447.70 at 1336 hrs on Tuesday, down 0.60 per cent from Mondays close.

"It doesn't seem to be any value creation (exercise) for shareholders. It is just a feel good factor to appease the shareholders and boost their confidence in ADAG," Kejriwal Research and Investment Services Director Arun Kejriwal said. "They want to tell shareholders we are aware of what you are going through."