State-owned Gas Authority of India Limited (GAIL) has said that it will buyback about 5.7 crore shares for Rs 1,083 crore. The company is looking to use its strong balance sheet to reward its shareholders for the second time in the last several years. GAIL shares are trading at a level of Rs 158.90 with a gain of 2.06 per cent on the Bombay Stock Exchange on April 1, 2022.
The buyback price is Rs 190 per share
Sethumadhavan KS, Analyst, Geojit Financial Services, says, “At Rs 190 per share, GAIL’s share buyback is very attractive based on the current market price (CMP). This buyback will reduce the total number of outstanding shares by 1.5 per cent and lead to some increase in future EPS. According to our analysis, the buyback, depending on the CMP and the expectation ratio of 50% to 100%, can give 10-20% returns to short term investors.
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24% premium over Wednesday’s closing price
The company has said that GAIL’s board of directors has approved buyback of about 5.7 crore shares at the rate of Rs 190 per share, this buyback will be about Rs 1,083 crore (excluding tax). The buyback price of GAIL shares is at a premium of 24 per cent over the closing price of the company’s shares on the National Stock Exchange (NSE) on Wednesday. GAIL had spent Rs 1,046.35 crore for such share buybacks in the year 2020-21 as well. The 52-week high of GAIL’s shares is Rs 171.35. At the same time, the low-level for 52 weeks is Rs 125.20.
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