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Indiabulls Real Estate Rs624cr buyback fails to bring cheer, stock slumps ~7%

IBR board has said that it will buy back 2.6cr fully paid up equity shares of the company at a price not exceeding Rs240/share.

Indiabulls Real Estate Ltd’s (IBR) Rs624cr buyback has failed to bring any cheer to investors as the stock dropped nearly 7% in intra-day trade on Monday.

IBR’s board, post market hours on Friday, said that it will buy back 2.6cr fully paid up equity shares of the company at a price not exceeding Rs240/share aggregating upto an amount of Rs624cr, being less than 10% of the total paid up share capital and free reserves of the company.

The share buyback price is at ~18% premium over Friday’s closing price.

The management also said that the proposed buyback will make the balance-sheet of the company leaner by reduction in overall capital employed in its business, which will, in turn, lead to higher earnings per share and enhanced return on equity.

As of March 31, 2018, IBR’s cash & cash equivalents were worth Rs3,181.1cr and net debt to equity was 0.5x.

Earlier this month, IBR sold its Chennai commercial asset One Indiabulls Park to Blackstone for around Rs900cr. Recently, IBR, through its wholly-owned subsidiary Yashita Buildcon, has entered into a binding and definitive agreement to acquire a newly constructed commercial building with leasable area of around 2.5lakh sq ft in Gurgaon. With this acquisition, IBR’s total annualized annuity revenue would be Rs1,513cr in 2020-21.

IBR has stated that its business strategy will now be focused on annuity revenue from commercial assets in Mumbai and the National Capital Region (NCR), and future investments will be directed towards building the commercial assets’ portfolio in these cities. The strategy for the residential development part of the business in India will focus on asset–light model of entering into joint development agreements.

Indiabulls Real Estate Ltd is currently trading at Rs191.95, down Rs13.75, or 6.68%, from its previous close of Rs205.70 on the BSE.
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