GAIL approves buyback of up to 5.7 cr shares, price set at ₹190. Details here
GAIL had done a share buyback in 2020-21. The government had received ₹747 crore from that share buyback.
PremiumThe board of state gas utility GAIL India Ltd on Thursday said it will buyback about 5.7 crore shares worth ₹1,082.72 crore under a share buyback plan. GAIL had in 2020-21 spent ₹1,046.35 crore on a similar share buyback.
In a stock exchange filing, the nation's top gas transporter and distributor said it plans to buyback shares, not exceeding 5,69,85,463 fully paid up equity shares of face value of ₹10 each at a price of ₹190.
Shares of GAIL were trading 1.53% per cent higher at ₹155.80. The buyback price is at a 24% premium over Wednesday's closing price of ₹153.40.
Buying back shares is considered a tax-efficient way of rewarding shareholders. The government owns a 51.80 per cent stake in the company and is likely to participate in the buyback.
GAIL had done a share buyback in 2020-21. The government had received ₹747 crore from that share buyback.
The share buyback, or share repurchase, is when a company buys back its own shares from investors or stakeholders. It can be seen as an alternative, tax-efficient way to return money to shareholders.
Buybacks are attractive in tax terms even after considering the 10 per cent tax on long term capital gains (LTCG).
"The Board approved buyback of about 5.70 crore shares through tender offer representing 2.50 per cent of its paid-up capital and free reserves as on March 31, 2021," GAIL said in the statement.
GAIL started its business in 1984, as a natural gas transmission company with a single cross-country trunk pipeline and has now become the flagship natural gas company of India. It is the largest integrated natural gas marketing and transmission company having its presence along the entire natural gas value chain.
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