The buyback will be for an aggregate amount not exceeding Rs 4,500 million at Rs 1,000 per equity share. The buyback price is 22% higher as compared to Friday’s closing price of Rs 823 per share on BSE. It touched a 52-week high of Rs 955 on January 10, 2018.
“The board has approved a proposal to buyback up to 4.5 million equity shares of the company for an aggregate amount not exceeding Rs 4.50 billion being 8.17% of the total paid-up equity share capital at Rs 1,000 per share,” Tata Investment Corporation said on Friday after market hours.
The buyback is proposed to be made from the shareholders of the company on a proportionate basis under the tender offer route using the stock exchange mechanism, it added.
With today's gain, Tata Investment Corporation has rallied 27% in past four trading sessions from Rs 702 on Tuesday, November 13, after it said that board will consider share buyback proposal at its meeting to be held on Friday, November 16, 2018.
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.
Thus far in the calendar year 2018, Tata Investment Corporation has underperformed the market by falling 21%, as compared to 3% rise in the S&P BSE Sensex till November 13.
Tata Sons held 68.14% stake in Tata Investment Corporation, as of September 30, 2018. The public shareholders have 27.02% stake, of which 18.69% with individual shareholders and 3.91% with institutional investors, the shareholding pattern data shows.
At 09:35 am, the stock was trading 6.5% higher at Rs 877 on the BSE, as compared to 0.37% rise in the S&P BSE Sensex. A combined 319,657 equity shares changed hands on the counter in first 10 minutes of trading. On an average sub 300,000 shares have been traded over the last two weeks on the BSE and NSE.