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Reliance Buyback: Only 10 cr. out of 10,000 cr. done

Reliance has initiated a share buyback for what is supposed to be a 10,440 cr. issue, at a cap of Rs. 870 per share.

The buyback ends Jan 19, 2013, which is about a year away. With about 200 days left, you might think this means Rs. 50 cr. per day of buyback. But that might be too much, since the stock itself trades just 400 to 600 cr. per day; you might have to reserve large buys for panic days.

However the total amount bought – since the first purchase on Feb 14 – has been a piddly 9.86 cr. in three purchases, while the stock has stayed under the buyback price the whole time.

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They’ll need to up this rate substantially – the stock has ended up at Rs. 819 today.

Meanwhile RIL has decided to buy much of Network18, and is supposedly also a buyer in Citi’s recent sale of its HDFC stake (TV Reports). These deals are likely to be in the 100s and 1000s of crores, while RIL’s purchase of its own stock is less than 10 cr.

Will the buyback follow the objective of a decent buyback, that is, to reduce the number of shares so that EPS will go up? Time will tell, but going by the past (just 149 cr. bought out of a planned 3000 cr.) and the recent data, I wouldn’t hold my breath.

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