InvestorQ : How do you see the buyback of shares offered by RITES Ltd.?
shrinidhi Rajan made post

How do you see the buyback of shares offered by RITES Ltd.?

Answer
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1 month ago


The government owned RITES Ltd has approved the buyback of shares worth approximately Rs.257 crore at a price of Rs.265 per share. The price represents a minor 3.8% premium to the closing price of the stock and is not too significant.

Rites will buyback 96,98,113 equity shares of face value of 10 each. The 30 September has been fixed as the record date for ascertaining eligibility of shareholders for the buyback. The buyback was done considering its debt free balance sheet.

The government holds a 72.02% stake in the company and was obviously driven by the government intent to boost revenues when the markets are good. Rites Ltd came out with a public issue in 2018 at a price of Rs.185 and at that time it was oversubscribed 67 times.

Rites Ltd. has already paid dividends and the board felt that it would make eminent sense to give out excess cash to shareholders in these difficult times. It will also not pressure on the company's return ratios; but now the EPS and valuations get a boost.