India Inc seems to be going slow on their buyback plans as the companies having begun their share repurchase programmes since the beginning of 2012 have acquired equity worth just about 7% of the overall target in little over five months.
According to the information available with the stock exchanges, as many as 12 companies began their respective share buybacks in 2012 for a collective amount of Rs 11,706 crore, but have so far bought shares worth an estimated Rs 839 crore.
These include Mukesh Ambani-led Reliance Industries (RIL) that began a buyback programme of Rs 10,440 crore early this year, but has so far purchased shares worth only Rs 643 crore -- accounting for just about 6% of the total amount earmarked for purchase of shares.
RIL shares today slipped to as low as Rs 700 a piece, which is much below the maximum price of Rs 870 per share fixed for the buyback plan.
The overall share buybacks, at about 7% of targeted amount, have been slow despite the stocks of many of these firms trading considerably below the targeted buyback price.
According to market experts, most of the companies that have undertaken buyback are trading below their offer price and the promoters could step up their buying activities when the prices go down further.
Destimoney Securities MD and CEO Sudip Bandyopadhyay said, "All the companies are trading well below their buyback price still they are not buying back shares suggests that they are expecting that prices would go down further."
"The success of buyback offers depends on many factors like willingness to buy the proposed shares and premium sustainability," CNI research Head Kishor Ostwal said.
He added, "In fact, many corporate houses failed to utilise the entire corpus targeted for the purpose in past and many firms even discontinued buying activities despite shares were available well below maximum buyback price."
Between February 14 and May 3, RIL has purchased 81.17 lakh shares for an average price of Rs 792 a piece.
RIL's board had approved buyback of up to 12 crore shares or 7.22% in January this year. The buyback which was opened on February 1, 2012 would close on January 19, 2013.
Interestingly, Monnet Ispat that started a Rs 100 crore buyback programme in mid-March has not purchased any shares till now, while Kale Consultants has almost completed its buyback activities.