GAIL Buyback: GAIL to consider share buyback, Varun Dubey explains the calculation

GAIL Buyback: The board of state gas utility GAIL India Ltd will consider the buyback of shares on March 31 - the second buyback in as many years. At what price will the buyback happen? How much will the buyback cost? Buyback trend at what premium? Zee Business Senior Research Analyst Varun Dubey's report.

Talking about the buyback of GAIL, Dubey said that the range of the buyback is a little conservative this time between Rs 160 and Rs 165. He said that the GAIL's share buyback price will come in between this range.

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He further said the buyback calculation is done based on history, the amount of cash, and the overall operation of the company. The company has only one buyback history which was come in January 2021.
 
He said that the previous buyback was at a 10 percent premium and the company had then done a buyback of around 1.55 percent and was 2.26 percent of equity and free reserve.

In this process, the company utilised 62.5 percent of the cash available in it. If we calculate on that basis, then on the day the buyback was announced, the cash was around Rs 147.65. If we also add the premium of around 10.5%, then it comes out to be around Rs 163.

The company has about 2040 crores cash, if 62.5 per cent is taken into account then it comes to around Rs 1274 crores. According to that, the company can buyback 7.82 crore shares which translates into 1.76 per cent of the total shares.

And if free reserve and equity are counted then it is 2.4 percent. That means the company will buy around 2.4 percent equity reserve, and around 7.82 crore shares.

On a Conservative Basis, Dubey said, we have come up with a range of Rs 160 to Rs 165. It may be slightly higher and lower than this, but the range will come out to be almost the same, he concluded.

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