Though convinced about the company's long-term prospects, buy back of shares by Reliance Infra to shore up its share price is unlikely to have much of an impact, say market experts.

“The stock is trading way above its fair value in the short-term and returns on their investments in BOT projects are yet to fructify,” said Mr Alok B. Agarwal, Head – Equity, Mata Securities.

In the last two trading sessions, R Infra bought back three lakh shares, two lakhs on Monday April 11, and one lakh on Wednesday April 13.

A company statement on March 28 said, that RInfra would use the open market route to buy back shares upto Rs 1,000 crore of outstanding equity shares subject to a ceiling of Rs 725 a share from time to time. The buy back would be done using the company's investments in liquid and marketable securities, said the statement.

R Infra has already bought back equity to the tune of Rs 923 crore. Valuing the three lakh shares at the closing price on the respective trading days, another Rs 13.8 crore worth of equity has been bought back with Rs 63 crore of equity remaining to be bought.

The buy back is aimed, among others, at improving the EPS, return on net worth and improve the share price. “There are five to six buy backs going on at the same time as on date and everyone wants to increase his share price, its just another buy back, nothing more,” said a Head of Research of a retail brokerage.

The company had indicated in its statement that the buy back was expected to reduce price volatility, deter speculation and signal to the capital markets that the scrip was undervalued on a price-to-book-value basis. “The company is still in the capex mode and though the consolidated book value is higher than the market value, the market still has to value them at their book value,” said Mr Agarwal.

The scrip closed at Rs 696.95 to a share on the BSE on Wednesday, up 1.98 per cent over its previous close.

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