The share buyback of Piramal Enterprises will kick-off on August 31 and the closing date is September 6. The company’s board had earlier approved a buyback of shares worth up to Rs 1,750 crore through the tender offer route.
The company will buy back up to 1.4 crore shares at Rs 1,250 per unit, which is at a premium of over 16% to the market price on the date of announcement.
This is also the first-ever share buyback exercise by the company since it went public. The board has fixed August 25 as the record date to determine shareholders eligibility for the same.
Shareholders who hold the company’s equity shares as of the record date will be eligible to participate in the buyback
The share buyback size represents 5.87% of the total paid-up equity share capital. The company’s promoter and promoter group have expressed their intention not to participate in the buyback.
As of June-end, promoter and promoter group entities held 43.5% stake in the company.
The retail entitlement ratio is about 7 shares as against 47 shares held as on record date and 1 equity share for 19 shares held for all other shareholders under the general category.
According to analysts, the expected retail acceptance ratio is around 30-35%.
Under a share buyback, the company buys back its own shares from shareholders and it is seen as a tax-efficient way to give cash back to investors. Share buyback reduces the number of shares available in the market and thereby increases the real value of the stock.
On Monday, the company’s shares were trading 4.32% higher at Rs 1105.9 on NSE.
For the recent first quarter, the company reported over 90% drop in ist consolidated net profit at Rs 509 crore, while consolidated revenue from operations rose 34% to Rs 2,899 crore.
The total assets under management (AUM) stood at Rs 63,938 crore; retail lending grew to 55% of AUM, from 34% in the same period last year.
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