Godawari Power shares hit 52-week high after share buyback announcement

The buyback represents up to 1.6 percent of the company's total paid-up equity share capital as of March 31, 2024.

Shares of Godawari Power and Ispat rose nearly 9 percent and hit a 52-week high of Rs 1,174.50 after the company's board approved a share buyback of upto Rs 301 crore via a tender offer route.  Under the proposed plan, the company will buy back about 21.5 lakh fully paid-up equity shares at Rs 1,400 per share.

The buyback price is at a 26 percent premium to the current market price of Rs 1,109 per share. At 12.26 PM, Godwari Power's shares were up nearly 3 percent.

The stock has gained 56 percent in the past 6 months, vastly outperforming Nifty which gained 10 percent during the same period.

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The buyback represents up to 1.6 percent of the company's total paid-up equity share capital as of March 31, 2024.

Godawari Power, the flagship arm of the Chhattisgarh-based Hira Group of Industries, operates two captive iron ore mines, a pellet plant, and a vertically integrated steel plant in Raipur. The company engages in mining iron ore and manufacturing iron ore pellets, sponge iron, steel billets, wire rods, HB wire, and ferro alloys.

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A share buyback, like the one undertaken by Godawari Power, involves the company repurchasing its shares from shareholders. This tax-efficient method of returning cash to investors reduces the number of shares available in the market, thereby increasing the intrinsic value of the remaining stock.

Godawari Power reported a 29.4 percent year-on-year increase in net profit to Rs 219.5 crore for Q4 FY24, up from Rs 169.6 crore in the same period last year. The company's revenue from operations rose 16.2 percent to Rs 1,529.8 crore, compared to Rs 1,316.6 crore in the previous year's corresponding quarter.

Shares of the company were trading up 3.25 percent on June 18 at 12:52pm, at Rs 113.95 apiece.

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