News Detail

<p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The share buyback programme of Cairn India, part of Anil Agarwal&#39;s Vedanta Group, may fall short of its target as the stock has surged past the maximum price at which it would purchase shares. Since January 23, when the programme began, Cairn India has bought about 3.67 crore or 21.48 Percent of the 17.09 crore shares it is looking to buy back. The process is scheduled to end on July 22.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">But for the dispute between Edinburg-based Cairn Energy, the former promoter of Cairn India, and the Indian tax department, the company could have bought back more number of shares. Earlier this year, the tax department had directed Cairn India not to allow the transfer of Cairn Energy&#39;s balance stake on the ground that it made capital gains when it transferred all its Indian assets to Cairn India in 2006 and got it listed.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Though the tax authorities lifted the restrictions imposed on Cairn Energy in April, the approval from the UK firm&#39;s shareholders to sell stake came only on May 15. By then, Cairn India was trading above the maximum buy back price of INR 335 a piece. After May 9, when the stock crossed this threshold price, the company was not able to buy a single share from the market. On Tuesday, Cairn India shares closed at INR 363.50. Cairn planned to buy back 8.9 Percent &nbsp;of the equity capital from the open market for up to INR 5,725 crore.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Through this buyback programme, the Vedanta Group was looking to increase its stake in Cairn India to 64.53 Percent from 58.76 Percent. A share buyback reduces the outstanding shares of the company, thereby improving financial return ratios. Analysts said the sharp jump in the stock price was unexpected. &quot;When company announced the buyback programme in January, the 5 Percent &nbsp;premium was good enough for such a huge equity,&quot; said Arun Kejriwal, founder, Kris Research.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">&quot;However, oil and gas stocks which were languishing due to uncertainty in the sector suddenly become favourite of the investors due to improved market sentiment over change in government and reports on a possible price hike in gas and other petro products&quot;.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Cairn India has risen 12.5 Percent since the beginning of buyback programme on January 23, but it has underperformed the benchmark Sensex and oil and gas index. Sensex gained 19 Percent&nbsp; while oil and gas index rose 29 Percent &nbsp;during the same period.</span></span></span></p> <p style="text-align: justify;"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Source-On Request</span></span></span></p>