Oil India Ltd, the nation's second largest state explorer, today said it will buy back 4.49 crore shares for Rs 1,527 crore, joining the list of PSUs that are using their idle cash to help government meet budgetary targets.
Government owns 66.89 percent shares in OIL and intends to participate in the buyback programme.
"The board of directors of the company in their meeting held on March 20 has inter-alia unanimously approved the proposal to buyback of not exceeding 4.49 crore equity shares of the company (representing 5.60 percent of the total shareholding) at a price of Rs 340 per equity share," the company said in a stock exchange filing.
Oil India shares ended 0.5 per cent down at Rs 334 apiece on the BSE.
The board of directors, it said, noted the intention of the promoter (Government of India) to participate in the proposed buyback.
The government has so far garnered about Rs 16,000 crore through buybacks by five PSUs including NMDC and Coal India.
It got Rs 7,519 crore when NMDC bought back shares, Rs 2,832 crore from Nalco share buyback, Rs 2,638 crore from Coal India, Rs 1,803 crore from BEL and Rs 794 crore from MOIL share buybacks.
Two other share buybacks - NCL and NHPC -- are in progress.
Share buybacks offer a route for companies to return some wealth to their shareholders, while potentially boosting their stock prices.
In a share buyback, a company will absorb or retire the re-purchased shares, and re-name them treasury stock.
Buying back stock is also a route to make a business look more attractive to investors. By reducing the number of outstanding shares, a company's earnings per share ratio is automatically increased.