Shares of Man Infraconstruction Ltd experienced a decline in Wednesday's trading session, despite the company's board approving a significant share buyback program. The stock initially fell by approximately 4 percent, closing the day down 1.04 percent at Rs 123.27 on the BSE, from its previous close of Rs 124.56.
The Mumbai-based real estate and infrastructure development company announced that its board had sanctioned an open market buyback of equity shares valued at up to Rs 169.29 crore. The maximum buyback price has been set at Rs 171 per equity share, representing a substantial premium over the stock's current market value.
Buyback Details and Investor Reaction
Man Infraconstruction plans to repurchase up to 99 lakh equity shares from shareholders, excluding promoters, the promoter group, and persons in control. This buyback will be executed through the open market mechanism on both the National Stock Exchange (NSE) and the BSE.
Despite the attractive premium offered—the maximum buyback price of Rs 171 per share is a 50.18 percent premium to the August 26 closing price on both exchanges—the market reacted negatively, pushing the stock lower. During Wednesday's trade, the stock opened at Rs 124.99, touched an intraday low of Rs 119.11, and a high of Rs 125.08 before settling.
Commitment to Buyback Execution
The company has committed to utilizing at least 75 percent of the maximum buyback size, which translates to Rs 126.97 crore, for the offer. Based on the maximum buyback price, this ensures a minimum purchase of 74.25 lakh equity shares. Furthermore, Man Infraconstruction will ensure that at least 40 percent of the maximum buyback size, or Rs 67.72 crore, is utilized during the initial half of the offer period.
The board's decision on the buyback price was informed by several factors, including prevailing market-price trends, the company's net worth, and a comprehensive assessment of the potential impact the buyback could have on earnings per share and other key financial ratios.