Cairn India slips after board OKs buyback

Cairn India fell 0.86% to Rs 321 at 9:23 IST on BSE after the company said its board approved buyback of equity shares.

The announcement was made after market hours on Tuesday, 26 November 2013.

Meanwhile, the BSE Sensex was down 6.15 points, or 0.03%, to 20,418.87.

On BSE, 32,000 shares were traded in the counter compared with average volume of 1.96 lakh shares in the past one quarter.

The stock hit a high of Rs 320.50 and a low of Rs 316.90 so far during the day. The stock hit a 52-week high of Rs 349.90 on 22 January 2013. The stock hit a 52-week low of Rs 267.90 on 28 March 2013.

The stock had outperformed the market over the past one month till 25 November 2013, rising 5.45% compared with the Sensex's 0.38% fall. The scrip had also outperformed the market in past one quarter, gaining 6.79% as against Sensex's 11.26% rise.

The large-cap company has an equity capital of Rs 1910.69 crore. Face value per share is Rs 10.

Cairn India said the buyback would be done from the open market, at a price not exceeding Rs 335 per share, up to an aggregate amount not exceeding Rs 5725 crore.

The maximum buyback price represents over 4% premium compared to the average of the weekly high and low of the closing share price of the company during the last two weeks.

The indicative maximum number of equity shares of Rs 10 each that can be bought back would be 17.08 crore, resulting in the reduction of equity capital by approximately 8.9%, the company said.

The buyback comes on the backdrop of strong cash flows generated by the company. The company is currently producing over 213,000 boepd and is on track to meet year-end target of over 225,000 barrels of oil equivalent per day from all producing assets, Cairn India said.

The company believes that the buyback will improve shareholder returns while maintaining the current dividend payout ratio as per the approved policy.

The company said the buyback is expected to begin in January 2014 after receiving shareholders' approval through postal ballot process.

Sudhir Mathur, CFO, Cairn India said: "We are happy to announce yet another shareholder reward mechanism in addition to the interim dividend declared last month. This comes on the back of strong operational excellence and robust financials. The company continues to work on its $3 billion capex program over next three years till FY16 and is well placed to develop its current asset base and monetize the existing exploration opportunities with the objective of strengthening its E&P portfolio."

Cairn India's consolidated net profit jumped 45.8% to Rs 3385.08 crore on 4.7% growth in net sales to Rs 4649.91 crore in Q2 September 2013 over Q2 September 2012.

The company reported foreign exchange fluctuation gain of Rs 429.16 crore in Q2 September 2013, as against foreign exchange fluctuation loss of Rs 785.81 crore in Q2 September 2012.

Cairn India is primarily engaged in the business of oil and gas exploration, production and transportation. The company sells its oil to major refineries in India and its gas to both public sector units and private buyers.

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