Mumbai: The country’s biggest real estate developer, DLF Ltd, began a Rs1,100 crore stock buy-back programme on Friday after a two-day delay as the stock slumped to below its initial public offering price.
The company was initially scheduled to start the repurchase programme on 15 October, and deferred the share buy-back to seek more time to comply with capital markets regulator Securities and Exchange Board of India’s guidelines.
DLF, which has lost three-fourths of its value since climbing to a record in January, aims to revive the stock with the buy-back, chief financial officer Ramesh Sanka said.
The company and its smaller rivals have plunged this year as investors spurned property stocks on concern that borrowing costs at a seven-year high and the global credit crunch will crimp profits.
On Friday, shares of DLF fell 10.3% to Rs291.30 at the close of trading on the Bombay Stock Exchange (BSE), as the exchange’s benchmark index, the Sensex, declined 5.7% to its lowest level since June 2006.
DLF, which sold shares at Rs525 apiece in June 2007, fell to a record Rs279 on 8 October, down 77% from its high of Rs1,225 on 15 January.
The New Delhi-based company will buy back as much as 22 million shares at a price not exceeding Rs600 apiece until 9 July 2009, according to a 10 July statement to BSE.
In June 2007, the company had raised Rs9,630 crore selling 175 million new shares, after receiving bids for three times the number on offer.
DLF and other real estate development companies had raised $4 billion (Rs19,480 crore today) last year as the Sensex rose 47%, its sixth annual increase.