National Aluminum Co. has announced a Rs 749.1-crore buyback at a time the government’s rushing to meet its divestment target before the close of the ongoing financial year.
Nalco’s board at its meeting on Jan. 27 approved to buy back 6.98% equity of the company at Rs 57.5 apiece, according to an exchange filing. That’s at a 24.5% premium over Monday’s closing price of Rs 46.15.
The buyback represents 7.83% of the aggregate of the fully paid-up equity share capital and free reserves as per the audited standalone and consolidated financial statements of the company, respectively, for the financial year ended March 31, 2020, the filing said.
Nalco has fixed Feb. 8 as the record date for ascertaining the eligibility of shareholders for buyback of equity shares.
Vishal Chandak, analyst at Emkay Global Financial Service, said this is done primarily to feed the government deficit in line with its wish list for PSUs to declare higher dividend/conduct buyback, and increase the planned capital expenditure for FY21 by at least 10-20%.
The central government has set the highest ever divestment target of Rs 2.1 lakh crore for the financial year ending March 2021. Of this, it expected to earn Rs 90,000 crore by selling stake in public sector banks and financial institutions and the remaining Rs 1.2 lakh crore by paring holding in central public sector enterprises.
Nalco’s stock closed 3.58% higher on Wednesday compared with a 1.91% drop in the Nifty 50.