GAIL gains 4%, hits 52-week high as board set to mull buyback on Jan 15

Shares of GAIL (India) rose 4 per cent to hit fresh 52-week high of Rs 141.40 on the BSE in Tuesday's morning session after the company said its board will meet on Friday, January 15, to consider buyback of shares and interim dividend. In the past one week, the stock has rallied 11 per cent as against a 2-per cent gain in the S&P BSE Sensex.

"The company’s board will meet on January 15 to consider share buyback and also payment of interim dividend for the fiscal year ending March 2021," GAIL said in an exchange filing. READ HERE

The government, which holds 52.1 per cent of GAIL, is likely to participate in the GAIL buyback just as it did in the case of NTPC, Engineers India, RITES and KIOCL.

As of September 30, 2020, the public shareholders held 47.89 per cent stake in GAIL, with foreign portfolio investors (15.09 per cent) and mutual funds (10.60 per cent) holding more than 10 per cent stake, shareholding pattern data shows. Oil and Natural Gas Corporation (4.86 per cent) and Indian Oil Corporation (2.43 per cent) collectively held 8.32 per cent of shares, data shows.

In the past three months, the stock of GAIL India has outperformed the market by surging 66 per cent as compared to a 22-per cent rise in the S&P BSE Sensex.

"Overall volumes are now back to pre-Covid levels. Polymer prices are also strong, with healthy momentum expected in the January-March quarter (Q4FY21). Petchem demand outlook is good and Pata plants are running stable. Q1/Q2FY22 would see some domestic capacity increase from HMEL. The gas trading outlook is better amid high international prices but the current situation is volatile and GAIL is monitoring the same, hence, we cannot say if further hedging can be done. GAIL expects spot LNG prices to cool off going ahead," analysts at Emkay Global Financial Services said in a stock update.

A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available in the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to return surplus cash to shareholders.

According to a PTI report, the government has asked at least eight state-run companies to consider share buybacks as it scours for ways of raising funds to rein in its fiscal deficit.