|Photo: The Business Standard|
According to Prime Database, announcements have been made for buying back shares worth Rs.2,220 crore in 2016 so far. In FY15, the total value of shares bought back was Rs.650 crore.
The Securities and Exchange Board of India (SEBI) amended the buyback rules in 2013 specifying that the minimum amount that a company is required to buy back should be 50% of the offer size, against the earlier practice of 25%. SEBI also limited the buyback period to six months, from the time the approval has been sought from the board or shareholders, because it found that companies typically did not utiilise the entire period of one year to complete the buy back.
Earlier this year, Just Dial, Borosil Glass, Himalaya Granites, Technocraft Industries, Tips Industries successfully completed buying back shares worth `550 crore from investors. While companies like Dr. Reddy’s, OnMobile Global, Excel Industries and ECE Industries currently have their buyback offers ongoing.
A six month old report showed that some companies, including Eveready Industries, Force Motors and Welspun India, have seen their share price increase multifold one-year after an increase in promoter holdings.
Similarly, others such as Adani Ports, ABG Shipyard and Cox & Kings have seen an erosion in their stock prices after a dip in their promoter holdings.