Shares of Goldiam International soared 17 per cent to a new high of Rs 1,074 on the BSE in intra-day trades on Monday after the company's board approved buyback of equity shares at price of Rs 1,200 via tender offer. The company is an integrated manufacturer and supplier of impeccable diamond jewellery to leading retailers and wholesalers in the USA and Europe.
“The board of directors of Goldiam International at its meeting held on September 13, 2021 has approved a proposal to buyback up to 380,000 equity shares of the company for an aggregate amount not exceeding Rs 45.60 crore, at a price of Rs 1,200 per equity share,” the company said in exchange filing.
The company further said the buyback is proposed to be made from the existing shareholders of the company as on the record date on a proportionate basis under the tender offer route using the stock exchange mechanism.
On rationale behind share buyback, Goldiam International said the company believes that the strong future and outlook of its business activities, is not accurately reflected in the prevailing market price, thereby giving an opportunity for buyback to create long-term value for its shareholders. The buyback would help in improving financial ratios like earnings per share and return on equity, by reducing the equity base of the company; and thereby, enhancing the overall return to shareholders, it added.
In past nine trading days, the stock has rallied 58 per cent from level of Rs 678 on August 27, 2021, after the company announced on August 30, that its board will meet on September 13, to consider a proposal for buyback of equity shares of the company.
Meanwhile, the shareholders of the company at their 34th Annual General Meeting held on August 28, 2021 had disapproved the proposal of .buyback up to 665,248 equity shares of the company for an aggregate amount not exceeding Rs 44.90 crore, at a price of Rs 675 per share.
Over the last five years, Goldiam has carried out two buybacks of shares to the tune of Rs 30 crore. During the last five years (FY17‐21), Goldiam has utilized Rs 84.17 crore on dividends and buybacks.