Reliance Industries - Stock Buyback
| Case Code: FINA002 Case Length: 08 Pages Period: 2004 Pub Date: 2005 Teaching Note: Not Available |
Price: Rs.300 Organization: Reliance Industries Industry: Petrochemical Countries: India Themes: - |
Abstract Case Intro 1 Excerpts
Introduction
When Reliance Industries Ltd (RIL) decided to call a meeting of its board of directors on 27th December, 2004 to discuss among other things a stock buyback, it received a lot of coverage in the media. The buyback proposal seemed to be in response to the fall in the RIL share price ever since the differences between the Ambani brothers became public. The RIL stock had fallen 12% from Rs 544 on 17th November, the day Chairman Mukesh Ambani (Mukesh) hinted in a television interview that all was not well within the family, to Rs 480.65 at close of trading on 20th December.
A company spokesman mentioned - "The company strongly believes that its shares are significantly undervalued. ... A share buyback is a strong signal of confidence in the share price and company performance and seems, at present, to be the best option to counter speculative activities that could be detrimental to the interests of RIL shareholders."
Company sources added that the depressed share price was totally inexplicable because nothing had fundamentally changed in terms of business strategy, operational efficiency or future outlook...
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