Joining the buyback bandwagon, Coal India on Tuesday said its board will meet next Monday to consider a proposal to buy back shares and appoint intermediaries to execute the plan.
Despite the overall bullish trend in the market, the company’s stock had underperformed the benchmark index over the last year.
Coal India’s shares were down 24 per cent in the year-to-date compared with a 3 per cent decline in the BSE Sensex.
In a statement on Tuesday, Coal India said its board of directors would meet on July 11 to consider the proposal.
As of March this year, the government owned 79.65 per cent of Coal India. Foreign portfolio investors held 8.52 per cent while Life Insurance Corporation had a 5.86 per cent stake.
Earlier, Coal India subsidiaries Central Coalfields, Mahanadi Coalfields, Northern Coalfields and Western Coalfields had announced that they would buy back their shares, cumulatively worth ₹3,895 crore.
The rationale The buyback of shares will increase the price of public sector companies and help the government meet its disinvestment target, which was lowered to ₹56,500 crore for this fiscal year against ₹69,500 crore in FY16.
Following a government diktat, three public sector companies — National Aluminium, MOIL and NMDC — have announced share buybacks worth ₹11,224 crore since May.
NMDC has proposed to buy back 80.08 crore equity shares at ₹94 each for a total consideration of ₹7,527.76 crore.
MOIL plans to buy back 3.48 crore shares at ₹248 a share, aggregating an outgo of ₹863 crore, while Nalco will acquire 64.43 crore shares for ₹2,834 crore.