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Our Bureau

Mumbai, Sept. 23 More companies seem to be announcing buybacks or delisting plans as the crisis in the international financial markets deepens, and dampens the domestic markets too.

More than nine companies have announced buyback of shares since June of this year and 11 companies have announced their intentions of delisting from the bourses. The Sensex during this period has dipped close to 16 per cent. “Most of the shares are trading below their intrinsic value now, which is why we are seeing more buyback and delistings now. It is quite common in a bear market,” said Mr Alex Mathew, Head of Research, Geojit Financial Services.

SRF Ltd, Patni Computer Systems, ANG Auto, Gateway Distriparks, Abbott India, Sasken Communications, Rain Commodities, Gujarat Fluorochemicals, Valiant Communications, DLF, Hydro S&S Industries, Bosch, HEG and TTK Healthcare are the companies that have announced their buyback offers. The share prices of most of these companies have fallen more than 50 per cent from the highs they touched during the year.

“During such market conditions, the promoters of the companies feel that the shares should be at better valuations and hence buy back their shares. Such buybacks increase the Earnings Per Share (EPS) as the company’s equity is lessened to the extent of the bought back shares,” said Mr Prithvi Haldea, Chairman and Managing Director, Prime Database.

The EPS of DLF for the quarter ended June 30, 2008 was Rs 4.28. The EPS of Bosch was Rs 87.44, Rain commodities was Rs 4.34, Sasken Communications Rs 5.99, Abbott India Rs 13.59 and TTK Healthcare Rs 1.20 during this period.

DLF in a statement on the BSE stated that it plans to buy back its shares worth Rs 1,100 crore at a price not exceeding more than Rs 600 a share. Rain Commodities informed the bourses that it plans to buy back Rs 26 crore at Rs 307 a share, Surana Telecom and Power plans to buy back shares worth Rs 6 crore at Rs 50 a share and Abbott India to buy back shares worth Rs 50.24 crore at Rs 630 each.

Internationally, too, companies such as Microsoft, Nike and Hewlett Packard have announced the buyback of their shares.

Microsoft has said it plans to buy back up to $40 billion worth of shares over the next five years, HP to buy back close to $8 billion and Nike is said to buy back $5 billion worth of shares.

While Accurate Traders, Bosch Chassis Systems India, Bagrrys India, Ray-Ban Sun Optics India, GE Capital Transportation Financial services, Industrial Cables India, Shree Nirman, Lucky Valley Investments and Holdings, Sai Service Station, Bhuruka Gases and Lotte India Corp are the companies that have announced the delisting of the companies shares from the bourses. ACC is planning on delisting its GDRs from the London Stock Exchange.

“Companies usually delist when they are going through some kind of restructuring or plan on capital reduction or even due to the fact that the share prices of these companies have taken quite a beating,” said Mr Sanjay Someshwar, a sub-broker, Ventura Securities.

It is not just the share prices that have fallen of these shares, but the first quarter results of the current fiscal of these companies were quite lacklustre too. The standalone net profit of Ray-Ban has dipped 19.7 per cent during this period to Rs 4.48 crore. Industrial Cables dropped 20.6 per cent to Rs 1.56 crore, Sai Service station fell close to 100 per cent to Rs 3.1 crore.

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