Rs 652,00,00,000 buy back announced by this Gujarat based company; Record date November 24!

This company is paying 14 per cent premium for the buyback at Rs 770 per share.

Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC), a leading fertilizer and chemical producer in India, has announced a mega share buyback of up to 84.78 lakh shares at a price of Rs 770 per share payable in cash, with the total aggregate amount not exceeding Rs 652,81,37,000, excluding transaction costs. This represents a significant premium of 14 per cent to the current market price (Rs 676). The buyback will be open to all shareholders, including promoters and members of the promoter group, as of the record date, November 24, 2023.

The buyback is likely to have a number of positive implications for GNFC shareholders. First, it will reduce the number of shares outstanding, which will boost EPS. Second, the buyback will send a strong signal to the market that GNFC is committed to shareholder value creation. Third, the buyback will provide shareholders with an opportunity to sell their shares at a premium and realize their gains.

The buyback is a textbook example of a value-enhancing corporate action. By reducing the number of shares outstanding, GNFC is effectively increasing the ownership stake of each remaining shareholder. This, in turn, should lead to higher EPS and a higher share price. The fact that the management is willing to buy back shares at a premium suggests that they believe the company is undervalued and has strong growth potential. This is a positive sign for long-term investors, as it indicates that management is aligned with shareholder interests.

GNFC is a diversified powerhouse in India, engaging in the production of fertilizers, chemicals, petrochemicals, energy, electronics, and telecommunications. GNFC's fertilizer division boasts a massive capacity of over 4 million tonnes, supplying farmers across India with high-quality fertilizers, including urea, nitrophosphate, neem de-oiled cake, and neem pesticides.

In addition, the company's involvement in the chemicals and petrochemicals sector is noteworthy, with the production of methanol, formic acid, nitric acid, and acetic acid. GNFC extends its reach to the energy, electronics, and telecommunications sectors while championing rural upliftment and fostering international trade through its industrial chemical exports to over 50 countries. With a strong commitment to sustainability, GNFC is a prominent player in India's industrial landscape

Disclaimer: The article is for informational purposes only and not investment advice.