State-owned National Aluminium Company(NALCO) will consider a proposal to buy back its shares at a board meeting scheduled on May 25, the company said in filing to to the Bombay Stock Exchange on Friday.
State-owned National Aluminium Company(NALCO) will consider a proposal to buy back its shares at a board meeting scheduled on May 25, the company said in filing to to the Bombay Stock Exchange on Friday. The market capitalisation of the aluminium producer is Rs 10,424 crore.
While the company has not disclosed details of the buyback, it could be fairly large, according to media reports. The shares of Nalco closed at Rs 40.45 apiece in the BSE on Friday and at the current share price, a 25% stake in NALCO is valued at Rs 2,606.2 crore. The proposed buyback is a part of government’s divestment plan.
Should 25% of the shares be bought back, post the buyback the Earnings Per Share (EPS) of NALCO would increase Rs 3.41 per share, calculations based on the Bloomberg FY17 estimates showed. For FY16, NALCO is likely to report an EPS of Rs 2.75 per share, as per Bloomberg consensus estimates. In terms of finances, Nalco has Rs 5,573 crore of cash and equivalents on its balance sheet at the end of FY15, Bloomberg data showed. Amid falling commodity prices in the global markets, shares of NALCO have slipped close to 25% since the beginning of Calendar 2015.The government is learnt to have opted the buyback route instead of Offer for Sale(OFS) keeping in the mind the declining share prices of the company.
According to Sebi norms, a company is free to fix the maximum price for the buyback and this price is independent of stock market performance. The final buyback price is usually 20-30% higher compared the current share price. For instance, during the recent buyback of Pipavav Defence, the company offered a 27% premium to the last trading price.