Reliance Industries to consider buyback, stock soars 5 pc

Mumbai, Jan 18 (PTI) The country's most valued firm Reliance Industries today said its board will consider tomorrow a share buyback from public investors, prompting an impressive five per cent rally in the company's stock price. The analysts said that the share buyback -- coming after a gap of about seven years for RIL shareholders -- could be aimed at helping the stock regain its lost glory, given a sharp plunge of over 34 per cent last year as against a fall of about 24 per cent in the market benchmark Sensex. Given the current valuations, the promoters would be able to buy back the shares at very low cost, while instilling a sense of confidence among the public shareholders, they added. "A meeting of the Board of Directors of the company will be held on January 20, 2012, to consider and approve a proposal for buy back of equity shares in accordance with all applicable provisions of law," billionaire Mukesh Ambani-led corporate giant said in a statement this morning. The announcement helped the company shares climb 4.94 per cent to close at Rs 776.90 in an overall lacklustre market. During the intra-day trade, the stock had gained over 6 per cent, but pared some of the gains. Reliance is also scheduled to announce its third quarter results on January 20. So far, the company has not specified the quantum or any other details of the proposed share repurchase. "It is reasonable to expect that this will be largest ever buy back program in the history of Indian capital market," said Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities. "Also, this buy back announcement will be a strong statement from the company's management that they 'feel' currently the share price in the market is undervalued than the intrinsic worth," he added. MORE