Coal India Approves Rs 1,050-Crore Share Buyback

Coal India Ltd. will repurchase up to Rs 1,050 crore worth of shares at a time the government is looking to collect Rs 5,000 crore through buyback offers of state-run companies.

The world’s largest coal producer will buy back up to 4.46 crore shares, or 0.72 percent stake, at Rs 235 apiece, according to its exchange filing. It set Feb. 15 as the record or cut-off date to ascertain which shareholders will be eligible.

The state-run miner also said its trading window will remain closed till Feb. 6 to comply with the norms of the Securities and Exchange Board of India with respect to the buyback.

Share buybacks is a route for companies to return some wealth to their shareholders, while potentially boosting their stock prices.

Coal India also said it will raise about Rs 1,065 crore by selling shares to its subsidiaries Mahanadi Coalfields Ltd., South Eastern Coalfields Ltd. and Northern Coalfields Ltd. The three units in their separate board meetings decided to buy back portion of their shares held by Coal India, it said in the filing.

In December, the government had announced the sale of 18.62 crore shares, or 3 percent stake in the company, to shore up its divestment revenue. In December, the government sold 2.21 percent stake in Coal India to the CPSE ETF, which is managed by Reliance Nippon Life Asset Management Ltd. As of Feb. 4, the government holds 72.09 percent stake in Coal India.

Shares of Coal India closed 0.5 percent lower ahead of the announcement, compared with a flat NSE Nifty 50 Index.