“The meeting of the board of directors of the company is scheduled on 20/12/2018, inter alia, to consider and approve the proposal for buy-back of the fully paid-up equity shares of the company,” ONGC said in a regulatory filing.
The government, which holds a 67.48% stake in ONGC, is expected to participate in the share buyback.
The government is targeting a minimum Rs 50 billion through share buyback offers of state-owned firms like Coal India, BHEL and Oil India. Besides Indian Oil Corporation (IOC), at least half a dozen other central PSUs have disclosed share buyback programmes. Prominent among these include NHPC, BHEL, NALCO, NLC, Cochin Shipyard and KIOCL that could fetch the government a little over Rs 30 billion.
The primary objective of share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better P/E multiple.
The stock of ONGC hit a 52-week low of Rs 135 on December 11, 2018, has fallen 37% from its 52-week high level of Rs 213 on January 25 this year. Thus far in the calendar year 2018, ONGC underperformed the market by declining 26% against 5.5% rise in the S&P BSE Sensex till Thursday.
At 02:27 pm, ONGC was trading 4% higher at Rs 149 on BSE, against a 0.03% decline in the benchmark index. A combined 15.82 million equity shares changed hands on the counter on the BSE and NSE so far.