- Agro-chemicals major UPL Ltd’s (formerly United Phosphorus Ltd) share price has surged as its board has approved the proposal to buy back its fully paid-up equity shares
- The maximum buyback size is ₹1,100 crores and the minimum is ₹550 crores.
- The company’s shares gained 5.35% in the last 5 days and they are trading at ₹699.50 levels apiece
Agro-chemicals major UPL Ltd’s (formerly United Phosphorus Ltd) share price has increased by 5.35% in the last 5 days as its board has approved the proposal to buy back its fully paid-up equity shares for an aggregate amount not exceeding ₹1,100 crores, the maximum buyback size. The minimum buyback size will be ₹550 crores.
It will buy up to 14.56% of the share capital for which it will spend 5.71% of its free reserves. The buyback of the shares will be at a price not exceeding Rs 875 per equity share through the open market route.
These shares have a face value of ₹2 and will be bought back from shareholders other than the promoters, the promoters group, and persons in control of the company.
The promoters hold 28.24% as of 3rd March 2022, while retail inventors hold about 11%. The remaining is held by foreign and domestic institutional investors.
“Subject to the market price of the equity Shares being equal to or less than the maximum buyback price, the indicative maximum number of equity shares bought back would be 1,25,71,428 equity Shares, comprising approximately 1.65 percent of the paid-up share capital of the company as of 2nd March 2022 (on a standalone basis),” a per a regulatory filing by the company.
The company’s shares gained 5.35% in the last 5 days and they are trading at ₹699.50 levels apiece.
Based on the minimum buyback size and maximum buyback price, the company would purchase a minimum of 62,85,714 shares.
The proposed buyback is subject to the approval of the members of the company by way of a special resolution and all other applicable statutory/ regulatory approvals, it added.
It board has constituted a buyback committee to do all things at its discretion in connection with the buyback.
Recently, UPL reported 24.89 percent growth in consolidated net profit at Rs 1,179 crore for the December quarter of 2021-22. The company’s profit stood at Rs 944 crore in the same period, a year ago.
Its revenue from operations grew 23.78 percent during the December quarter at Rs 11,297 crore, compared to Rs 9,126 crore in the same period of 2020-21.
UPL Limited is an Indian MNC and is one of the top 5 players in the global agrochemicals industry. However, it seems undervalued as its PE ratio is way below the industry average and it has a low PEG ratio.
Usually, a buyback is done to arrest the fall in the value of a stock by reducing the supply of the stock. This pushes up its share price through a better price to earnings.
Many companies are using the buyback route to reward investors and control the fast slipping share price after the recent market crash.
