Gandhi Special Tubes: Buyback Details

Subscribe to GoodReturns
For Quick Alerts
For Daily Alerts

    Gandhi Special Tubes, a company into the niche market of manufacturing value-added steel that finds its use in the automobile and other engineering industries has on Tuesday received board's approval for share buyback.

    Gandhi Special Tubes: Buyback Details

    With a cash reserve of approx. Rs. 140 crore, the company plans to utilize its idle cash of Rs. 40 crore in buying back its shares at a price of Rs. 500 per share as against the closing price of Rs. 347 in Monday'. Soon after the news, the stock made a 52-week high of Rs. 405, surging 16% in intraday trade yesterday.

    In a BSE filing, the company said, "The company to undertake a buyback of up to 880,000 equity shares of Rs 5 each aggregating up to 5.99% of the total paid up capital of the company at a price of Rs 500 per share, on proportionate basis through tender offer".. The promoters have the option to participate in the buyback, it added.

    What share buyback holds for company and investors at large?

    For the company: With buyback of shares, outstanding number of equity shares shall reduce by 6% and hence dividend per share and return ratios will improve. At a current market price, the company is offering a dividend yield of 3% or more which will help the company to sustain high valuations.

    Also, with better demand estimated for the company's specialty steel tubes from automobile, mining and road development space, valuations will be reflective of the growth clocked by the company in years to come.

    For investors: At a current market price of Rs. 406.60 on the BSE, investors shall be able to cash in a good 23% return at the buyback price of Rs. 500 per share by tendering shares in the offer.

    Story first published: Wednesday, December 20, 2017, 19:41 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more