In a move to restore investor confidence in its stock price that has fallen 23% since the first week of January, Anil Ambani-led Reliance Infra (R Infra) on Monday announced a buy-back offer for shares worth Rs 1,000 crore.
The buy-back offer price for each share is up to Rs 725 through open market purchase, a 11% premium to the company's closing price of Rs 662.1 on the Bombay Stock Exchange on Monday.
A company statement said that the buy-back will start on April 5. The company had done three-buy-backs in the past aggregating Rs 923 crore. "The stock was hammered for sometime. We want to bring in confidence among the investors on the Rel Infra stock," said a company spokesperson.
Reliance Infra expects that this move will reduce short-term volatility on its share price and deter speculative activity.
"The shares purchased under the buy-back programme will be extinguished, as required under SEBI guidelines, leading to a reduction in the company's outstanding equity capital," said a statement from the company.
The company is eyeing 10% of the infrastructure projects worth Rs 70-80,000 crore that are expected to be put under bid this year. The company said it expects a revenue of Rs 1,000 crore from the 10 road projects to be completed next fiscal.
Reliance Infrastructure said its share price is trading at a discount of 24% to its consolidated book value.