Watch out for Coal India on buy back

Finally, the board of directors of the state owned enterprise have approved the buyback of shares.  Coal India, post market hours has approved the buyback of 1.72 per cent of shares at a price of Rs 335 per share. The company is expected to spend Rs 3650 crore for the buy back.

On the other hand, the stock opened 0.51 per cent higher on the pre market indicative. The shares on July 11 closed at Rs 322.15, which means that the company will be paying a premium of 4 per cent on each share for the buy back.
On the other hand, this buyback will result in a contraction of Coal India’s paid up capital by 1.7 per cent, but that might not have much impact on its free float or the shares available for trading. The trend of buy back is a new trend the companies are exercising instead of paying dividends to the shareholders.

The buyback will primarily benefit the Union government, which owns 79.65 per cent of Coal India’s shares. It will also benefit Life Insurance Corporation of India as the corporation owns around 5.86 per cent of shares.
On the other hand the scrip's 52 week High/Low stand at Rs 447.25/272. Shares in the last 3 months have given a return of 17 per cent and in the last 1 month the shares are up by 5 per cent.

Coal India Limited (CIL), is an Indian state-controlled coal mining company headquartered in Kolkata, West Bengal, India. It is the largest coal producer company in the world and contributes around 82 per cent of the coal production in India.