Sreeleathers ltd has proposed a buyback of shares and the price calculated is much less than the market price. What can be the reason behind this move? Bring the stock price down and then buyback? Smart way to increase promotor holding? Can any senior shed some light on this? To me, it seems fishy.
Stock price went up in anticipation that buy back will be at higher price (which is foolish) , At Rs 150 company is trading at 30+ times earnings which is decent premium to do buy back at.
secondly from buyback promoter holding doesn’t increase …
I am calculating like this: Out of 100 shares, Promotors have 65. Now company buys back 15 shares. Shares left are 85. Promotors still have 65, so now promotor holding is approximately 76%.
Yes in that case if you are shareholder your relative holding will also go up … Don’t tender into the buy back.
Sreeleather is now trading at 183 and the company proposes a buyback at 156, subject to evoting results. I dont think anyone would be interested to sell with a loss. Could this be considered a manipulative action? Let me know if you guys have other views!
this happens in case of many buyback offers. market price usually goes slightly higher than buyback price. in such a case, promoter serious in going ahead with buyback will increase the acquisition price.
Why is sreeleathers up 13%?