Shares of NIIT surged 19 per cent to Rs 163.70 on the BSE in intra-day trade on Thursday after the company announced that its buyback offer would open on April 12, 2021. The buyback, which is proposed to be made under the tender offer route, will close on April 28, 2021.
The company’s board on December 24, 2020, had approved an up to Rs 237 crore (of around 9.8 million shares) buyback proposal at Rs 240 per equity share.
As of December 2020, the promoters held a 34.27 per cent stake in NIIT. Foreign portfolio investors have 23.80 per cent holding, followed by individual shareholders (22.37 per cent), mutual funds (8.01 per cent) and others (8.2 per cent), data as per the company’s pre-buyback shareholding pattern showed.
The buyback is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than the market price. When a company buys back shares, the number of shares outstanding in the market reduces.
A buyback allows companies to invest in themselves. By reducing the number of shares outstanding on the market, buybacks also increase the proportion of shares a company owns. The fact that the company has the confidence to use its reserves to buyback its own shares gives a hint that the company management perceives its shares to be undervalued.
In the past month, the stock has underperformed the market by falling 29 per cent as against a 0.83 per cent rise in the S&P BSE Sensex till Wednesday.
NIIT is a leading skills and talent development corporation that is building a manpower pool for global industry requirements. NIIT offers training and development solutions to individuals, enterprises and institutions. NIIT has two main lines of business across the globe – corporate learning group and skills & careers business.
At 09:45 am, NIIT was trading 17 per cent higher at Rs 160.85 on the BSE as against a 0.56 per cent gain in the S&P BSE Sensex. The trading volumes on the counter more-than-doubled with a combined 1.47 million equity shares having changed hands on the NSE and BSE so far.