UPL announces cash buyback of Rs308 cr worth of shares

Agrochemical firm  UPL Ltd (formerly United Phosphorus Ltd) on Monday announced a buy-back of up to 1.40 crore fully paid equity shares of Rs2 each at a price not exceeding Rs220 per share, up to an aggregate amount not exceeding Rs308 crore, from the public and institutional investors in a cash deal.

The company's board has approved the buyback of shares, UPL said in a Bombay Stock Exchange filing. The offer price is at a premium of around 14 per cent to Friday's closing price of Rs193.25.

The promoters of UPL, the Shroff family and associates, have a 28.8 per cent stake in UPL. Institutional investors have around 20 per cent.

According to the filing, the chairman of the company informed the board that present market value of equity shares does not reflect its true valuation. One of the ways to get true valuation will be to buy back shares from the market.

The company has sufficient financial resources, and these can be gainfully employed in buyback of shares which will increase shareholder value. "The buyback will result in reduction of number of shares accompanied by possible increase in earnings per share and return on capital," it added.

UPL had reported a consolidated net profit for the second ended September at Rs154.63 crore as against Rs119.80 crore in the same quarter last year.

The company has 23 manufacturing sites, of which nine are in India, four in France, two in Spain, three in Argentina, and one each in the UK, Vietnam, Netherlands, Italy and China.