Companies with plans to buy back shares in India

by Manshu on August 11, 2011

in Investments

There are several filters that people use to alert them to good stocks. Taking note of great products and then finding out who manufactured them is one way; looking for good dividend paying stocks is another, and looking at companies who plan to buy back their own shares is a popular way as well.

The rationale behind this is that companies who are willing to buy back their own shares think that the shares are undervalued, and are investing in them. This is also an action that is focused on increasing the share values, so that’s another reason this method is used as well.

Just to be clear, this is not a list with only those companies that currently have buyback offers open, but also includes those companies that have concluded buybacks in the past. That’s because the idea of this list is not to find companies that provide opportunities to buy shares from the market and then offer them for the buyback but to see if there are generally any companies here that can be good long term investments.

Here is a list with some companies I could find.

S.No. Company Max Buyback Price Close Date
 1 Allied Digital Rs. 140 17 Feb 2012
 2 Deccan Chronicle Rs. 180 3 Jan 2012
 3 FDC Rs. 135 25 Jan 2012
 4 HEG Rs. 350 13 Mar 2012
 5 Infinite Computer Solutions Rs.230 10 April 2012
 6 PVR Rs.140 26 May 2012
 7 Reliance Infra Rs.725 13 Feb 2012
 8 SRF Rs.380 25 Feb 2012
 9 Zee Entertainment Rs.126 23 March 2012
 10 Piramal Healthcare Rs.600 13 Apr 2011
 11 Lakshmi Machine Works Rs.2045 24 Feb 2011
 12 India Infoline Rs. 99 07 Feb 2011
 13 Siemens Rs. 930 13 April 2011
 14 Merck Rs. 435 21 May 2010
 15 Aegis Logistics Rs. 143 6 Feb 2010
 16 Amrutanjan Rs. 900 18 July 2011

To be honest, I’ve never been a big fan of finding companies in this way because sometimes I feel that buybacks are announced more as gimmicks to jack up share price, and many times when you look at companies offering a buyback program in India – you also find stronger competitors and that makes you think why not invest in those instead.

On the other hand, I’ve heard investors who have found good ideas this way, and since I’ve never had a post on this – I thought I’d start a post on this topic here.

I’m sure there are several other buy back shares that I’ve missed – do leave a comment if you know of any company that doesn’t figure in this list.

{ 11 comments… read them below or add one }

Jubin August 11, 2011 at 2:47 PM

Thanks for sharing this … i am totally new to term buy back, after reading here i googled it and got updated. thank : )

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Manshu August 11, 2011 at 10:39 PM

I got a few other emails like your comment Jubin, so I think I should write an introductory post to them here as well.

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Raja52 August 16, 2011 at 1:59 PM

A good compilation! Today I checked the price of the ones which are yet to close and found that the current market price is much lower than the buy back price and it is very tempting to buy a good number of these shares. (Ex Allied Digital is trading at Rs 33.40 (and no buyer) and the buy back price is Rs 140.) You have correctly warned in your “Introduction to share buy back in India” that there is no guarantee that all shares will be bought back. Can you please tell me is there a safe number or just forget these types of shares?

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Manshu August 17, 2011 at 6:09 AM

Hi Raja,

Thanks for bringing this up – Allied Digital has announced 140 as the max price for its buyback and they will be buying from the share market and not the individual investor so that means there is no chance of you selling any shares to Allied Digital at Rs. 140. They are just going to buy from NSE and BSE, and 140 happens to be the max cap their board has declared.

I will do a detailed post on this later.

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Prabhakaran January 18, 2012 at 5:58 PM

Manshuji,

This refers to the news item on RIL’s proposed buyback of shares. In your reply to Mr. Raja, you mentioned “…are just going to buy from NSE and BSE…”. Please correct me if I am wrong: NSE and BSE are Stock Exchanges and do not hold any shares. Shares have to be bought from the public. In any reverse book-building exercise, the promotors have to approach the shareholders indicating the max price the promotors would offer and garner the shares from the market.

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Manshu January 18, 2012 at 7:43 PM

Great question!
There are two ways in which a company does this – one is that they approach the shareholders, send them the form etc. and the other way is to just go out and buy the shares from the stock exchange. In that case they will just indicate a maximum price and then go out and buy shares from the stock exchange as long as the price is below their max indicative price and they won’t promote the shareholders at all. This is what Allied Digital did.

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Raja52 August 17, 2011 at 11:26 AM

Thanks Manshu for informing me that Allied Digital will not buy from the investor! But this important point did not strike me even though I had gone through the entire pdf file containing all terms and conditions.
Another striking thing about this company, a few years back the share value used to be more than Rs700 and now it is around Rs 33. I do not know whether there was any split of shares. Even last year (Apr 10), experts had given a target of more than Rs 350 for this company.

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Manshu August 18, 2011 at 4:52 AM

I was specifically looking for that so I guess that’s how I spotted it. You have found an excellent example though, and I’ll do a full post on this soon. I can see a split in face value from 10 to 5 in 2009….there might be a few other actions also.

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Raja52 August 18, 2011 at 10:43 AM

Hi Manshu,
Thanks again for your quick response. I am happy to note you are going to a full post on this soon. I am looking forward to it!
I am sure you will also recommend some good ones (risk is always there!). I know you normally do not recommend but please highlight at least the bad ones so that we stay away from such shares.

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Manshu August 21, 2011 at 10:47 PM

For the next post I was just thinking of emphasizing that there is a difference between these two types of share buybacks – I think that is important enough to merit a post of its own. I will then create of list of the two for a separate post, and offer a few thoughts on each one.

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Raja52 August 22, 2011 at 10:00 AM

Great! Looking forward to your posts!

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