GAIL shares rise nearly 2% In opening deals on Friday, 158 on the BSE, GAIL (India) Limited said on Thursday that it will buy back 5.7 crore shares. 1,083 crore as it uses its healthy balance sheet to reward shareholders for the second time in as many years.
“Gail Shares buy back Rs 190 per share is attractive on CMP basis. The buyback will reduce the total number of outstanding shares by 1.5% and marginally boost future EPS. The stock is currently trading at 6.1x EV/EBITDA 1Yr Fwd, which is lower than the 5-year average of 7.1x due to headwinds in the sector. As per our analysis, the buyback can provide a return of 10% to 20% for short-term investors depending on the CMP and acceptance ratio,” said Setumadhavan KS, analyst at Geojit Financial Services.
GAIL’s Board of Directors approves “buyback of approximately 5.70 crore shares at the rate of Rs. 190 per share overall approx. 1,083 crore (excluding taxes),” the company said in a statement. The buyback price of equity shares is at a premium of around 24% on Wednesday’s NSE. GAIL had spent 2020-21 1,046.35 crore on similar share buyback.
A share buyback, also known as a share repurchase, is a corporate action to buy back its own outstanding shares from its existing shareholders, usually at a premium to the prevailing market price. It can be an alternative tax-efficient way of returning money to shareholders. Share buybacks reduce the number of shares in circulation, which can increase the share price and earnings per share (EPS).
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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