coal indial ltd

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A.praveen kumar (Querist)
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13 July 2016 coal indial Ltd buy back the shares at Rs.335 .but the stock price was Rs.316.50 .why they have done for such higher price.can any body explain the reason for that

CA S K MISHRA

CA S K MISHRA (Expert)
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17 July 2016 Buy back means re-acquisition by a company of its own stock. When a Company feels that the market price of its Shares are under valued & they have sufficient Cash reserve, they offered for buy back of share.After buy back, the free float of share in the market reduced & price goes up. The buy back price fixed by the company are always higher than Market price, to make it attractive so that investor will offer their holding to company for buy back and by offering higher price than market price, they give a strong signal that the share is highly under valued..Once a company took decision on buy back of share ( Total amount of buy back fixed), they can not go back.

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