Chennai: Kalanithi Maran-promoted Sun TV Network Ltd said on Friday it will consider a proposal for a share buy-back. Investors reacted positively to the news, which sent Sun TV shares higher by 5.21 % at 395.70, while the benchmark Sensex ended 0.68% lower to 26,656.83 points.

The Chennai-based media company informed BSE that its board of directors will meet on 5 November to consider and approve the proposed buy-back of shares.

In a buy-back, a company buys its shares by paying cash. The company will cancel the bought shares, thereby reducing the number of shares.

This is an indication that the Sun TV management thinks the intrinsic value of its shares is higher than the prevailing price, said a Mumbai-based analyst who tracks the company but did not want to be named.

The company, which also owns Indian Premier League (IPL) cricket team Sunrisers Hyderabad, has about 750 crore in cash as on 30 September, which will enable it to fund the buy-back of equity, he added.

The only hurdle can be if the promoter’s holding increases to over 75%, said another analyst, who also requested anonymity. Kalanithi Maran and his family already own 75% in the company—the limit set by the market regulator, Securities and Exchange Board of India (Sebi).

Depending upon the response to the company’s move to buy back shares, the promoters will also tender their shares so the holding does not exceed 75%.

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