GAIL shares hit 52-week high ahead of the scheduled buyback on Friday

Shares of GAIL hit a 52-week high on Tuesday’s intraday trade. It breached its previous 52-week high record of 171.35 to reach 173.45 on BSE. 

Summary in Brief

GAIL’s board of directors announced a buyback of 5.7 crore shares on March 31, 2022. Since the announcement, there has been a continuous buying in heavy volume in GAIL. 

GAIL shares opened higher on Tuesday and continued to rise further until they reached their new 52-week high of Rs 173.45. However, it faced resistance there and declined before the closing. As of Wednesday, the shares closed at Rs 165.60 after a volatile intraday session. 

GAIL Share Buyback Plan

The announced buyback of 5.7 crore shares with Rs 190 apiece, Rs 1,083 crores worth is happening through the tender route, which will allow the government to participate in the process. The Government is also the majority stakeholder in GAIL with a 51.8% stake. The natural gas explorer and producer has said that the planned buyback is only for 2.5% of its paid-up capital and free reserves as of March 31, 2021.

The shareholders eligible for buyback will be decided on Friday, April 22, 2022. As per the company, the buyback of equity shares will help it to optimize the capital structure and enhance return on equity. The reduction in equity will also help shareholders in the long term. 

The company will use the internally generated cash reserves for the buyback and does not wish to raise additional debt only for the buyback purpose. The company also said that the buyback will not affect its earnings materially, except for the expenses incurred for financing the buyback. 

The Company believes that this reservation of 15 per cent for small shareholders would benefit a large number of public shareholders, who would get classified as “small shareholders”.

About GAIL

GAIL (India) Limited (formerly known as Gas Authority of India Limited) is a natural gas explorer and producer. The government-owned company comes under the ownership of the Ministry of Petroleum and Natural Gas. As of now, the company deals in natural gas exploration and production, liquid hydrocarbon, LPG transmission, petrochemical, distribution of city gas, renewable energy exploration and production, Petrochemicals, GAILTEL, and electricity generation.