Coal India, in which the government had earlier this month sold 3.18 per cent stake to raise Rs 53 billion, has agreed to launch a share buyback early next year.
As many as six CPSEs have made regulatory filings to the stock exchanges for launching share buyback programmes, which could fetch the government a little over Rs 30 billion.
These companies are NHPC, BHEL, NALCO, NLC, Cochin Shipyard and KIOCL.
The CPSEs have been asked to buy back the shares following the capital restructuring guidelines set out by DIPAM on May 27, 2016.
As per the guidelines, CPSEs having net worth of at least Rs 20 billion and cash and bank balance of above Rs 10 billion have to mandatorily go in for share buyback.
It had also asked every CPSE to analyse in the first board meeting after the closure of a financial year the cash and bank balance, expansion plans, borrowing plans, net worth and market value of shares and explore option for buying back of shares.
Share buybacks offer a route for companies to return some wealth to their shareholders, while potentially boosting their stock prices. In a share buyback, a company will absorb or retire the repurchased shares, and rename them as treasury stock.
Buying back stock is also a route to make a business look more attractive to investors. By reducing the number of outstanding shares, a company's earnings per share ratio is automatically increased.
So far in the current fiscal, the government has raised over Rs 150 billion through minority stake sale in CPSEs as well as Bharat-22 ETF. The budgeted target for disinvestment has been set at Rs 800 billion.