On Friday, the board of RITES Ltd said it has approved the buyback of 96.96 lakh shares with repurchase amount not exceeding Rs 257 crore.
The transport infrastructure consultancy and engineering firm informed in a stock exchange filing that 96,98,113 equity shares of the face value of Rs 10 each would be purchased at Rs 265 per share, translating into the total buyback amount not exceeding Rs 257 crore and representing 9.97 percent and 9.76 percent of the aggregate of the fully paid-up equity share capital and free reserves of the company for the year ended March 2020.
The company further said that the board has approved 30 September 2020 as the record date for the purpose of ascertaining the eligibility of shareholders for buyback of equity shares.
RITES was listed in July 2018, and at present 72.02 percent shares are held by the Government of India and the balance is with the public and financial institutions.
It is a mini-ratna public sector enterprise having diversified services and geographical reach in over 55 countries of Asia, Africa, Latin America, South America and Middle East regions.
RITES Ltd is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).
Shares of the company rose for the second straight session on Friday, ahead of the buyback announced climbing 1.11 percent to Rs 255.25.
With strong financial fundamentals and a debt-free balance sheet, RITES share buyback reflects the management's confidence in the company and its growth prospects.
Buybacks allow listed companies to purchase their own shares from the open market and in an ideal situation is considered a positive move. Some use repurchasing as a way to reward investors by distributing excess cash instead of giving dividend.