MUMBAI: Cement maker Dalmia Bharat Ltd and financial services provider Motilal Oswal Financial Services Ltd on Saturday announced share buybacks worth ₹650 crore collectively, following the volatility in the stock market amid the COVID-19 pandemic.
On Friday, Mint reported that several companies planned to buy back their shares from existing investors in a move aimed at instilling confidence among investors in times when most stocks have shed significant value. Share buybacks are generally carried out at a premium to the market price and is used as a tool to signal the investors that the company feels its stock is undervalued at the current price.
On Saturday, Dalmia Bharat in a stock exchange filing, said its board had approved a proposal for buyback of the company’s equity shares for an aggregate amount not exceeding ₹500 crore, excluding tax and other expenses, at a maximum buyback price of ₹700 per share from shareholders (other than promoter entities).
Dalmia Bharat's shares closed at ₹511.1 per share on the BSE on Friday.
Motilal Oswal also announced on Saturday it will buy back its shares worth up to ₹150 crore at a maximum price of ₹650 apiece. Motilal's shares closed at ₹605.6 on Friday.
With their share buyback announcement, these companies join others such as Sun Pharmaceuticals and Emami Ltd, who this week announced their respective plans to buy existing shares from investors. While Sun Pharma plans to buy ₹1,700 crore worth of its shares, Emami Ltd said it will acquire shares worth ₹194 crore.
Kalpataru Power Transmission Ltd too has announced its intention to undertake a share buyback, although its board is yet to approve the same.
According to data from primary market tracker Prime Database, in the first two months of 2020, six companies have bought back shares worth ₹1,289.15 crore. Sixty nine companies bought back shares worth ₹43,506 crore in 2019.