India Inc bought back shares worth Rs3,000 crore from public shareholders through the repurchase programme last year, achieving just about 34 per cent of the targeted amount. In all, 33 buybacks were concluded with a total acquired amount of Rs3,023 crore in 2014, as against the offered amount of Rs8,939 crore -- achieving a target of 34 per cent, according to Prime Database.
In comparison, 27 buyback programmes were completed in 2013 worth Rs6,892 crore. This was against the target to repurchase shares worth about Rs14,415 crore from the public shareholders. Thus achieving a target of 48 per cent. Market analysts attributed the reason for decline in the number of companies achieving the full target to surge in the market barometer, with the BSE Sensex surging by 30 per cent in 2014.
“Strong, buoyant secondary market which led to an increase in stock prices which acted as a deterrent for buybacks,” Prime Database Managing Director Pranav Haldea said. The largest buyback completed was by Cairn India for Rs 1,225 crore. However, the company had set a target to repurchase shares worth about Rs5,725 crore from the public shareholders.
Buyback of shares means repurchase of outstanding shares using surplus cash in the balance sheet of a company. It results in a reduction in share capital to the extent shares bought back. The move also leads to an increase in promoter holding and improvement in earnings per share for the future period.