ril buyback

8/2/2019 Ril Buyback

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RIL BUYBACK


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Definition

The repurchase of outstanding shares (repurchase) by a

company in order

To reduce the number of shares on the marketTo increase the value of shares still available (reducing

supply), or

To eliminate any threats by shareholders who may belooking for a controlling stake.

To increase the returns for the shareholders


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Types of Buyback

Open Market

They just declare that they are going to buy shares fromthe stock market, and

there is nothing that you have to do here (except perhaps

hope for a gain in share price). It involves only the brokerage charges which are to be

paid to carry out the buying process from the shareholders


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Buyback through tender

Sending a tender form to all its shareholders withcomplete instructions

Filling up a Delivery Instruction Slip with the trading

and demat account details

Calculating how many shares it got and in what

proportion can it carry out the buy back.

Notified of the number of shares that are accepted

Money will either be deposited directly electronicallyor be sent by a check


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RIL Buy Back facts

Buy Back will be executed through the open market.

The companys net profit in Dec 2011 is the lowest in two

years.

The Maximum Price is set at Rs.870/-

There is no guarantee that prices will rise above Rs.870/-

The maximum size of the buyback, Rs 10,440 crore

The buyback is worth 7% of its net worth.


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What Stock market gurus feelabout buybacks


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Warren buffet

a company can add

value to its shares by

buying some of themback:

a. When it has surplusfunds.

b.When it can buy themback at a price below

intrinsic value.


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Peter lynch

loves companieswhere the senior

managementsbought stocks oftheir own companies

Is the simplest, best

way a company canreward its investors.


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Benjamin Graham

It was thought to be 'in theinterests of the corporation'to acquire the stock at the

lowest possible price. consequence of this idea is

that those stockholders whosell their shares back to thecompany are made to sufferas large a loss as possible,for the presumable benefit ofthose who hold on.


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Analysis Of Ril Buyback

Historical Share Price


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Date Adj Close*

27 Jan, 2012 817.00

25 Jan, 2012 791.00

24 Jan, 2012 781.5023 Jan, 2012 772.00

20 Jan, 2012 794.10

19 Jan, 2012 784.40

18 Jan, 2012 773.65

17 Jan, 2012 740.30

16 Jan, 2012 715.25

13 Jan, 2012 731.95

12 Jan, 2012 740.00


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Key Financials(in Rs crores)Financials 2011 2010

Cash 604.57 362.36

Current Assets 47871.89 39004.19

Financials Dec11 Sep1

Other incomes 1717.00 1102.00

Operating Profit 7285.00 9844.00

Gross Profits 9002.00 10946.00


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Key Findings

Ril Believes that stock is valued below its intrinsic value of

Rs 870/-

The purpose of the buyback is to protect reliance shares

from market fluctuations.

The price of reliance stock will not rise above 870/- and

may even fall after Feb.1st due to over subscription

Promoters holding will increase

In Short term may Improve financial Ratios

Long term may impact profitability

ril buyback

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