DLF has announced a buy back of Rs 1,100 crore equity at a maximum price of Rs 600 per share. The volume of the buyback would go up to 2.2 crore shares; that is 1.1-1.29% equity. The promoters’ stake will go up from 88.1% to 89.3%, if buyback is completed.

What does this mean for shareholders?

This offer will be valid for one year; it will increase the promoters’ stake by 1% to around 89%. DLF says the share price does not reflect the true value of the company. And that they wil buy back at the prevailing market price from shareholders. The management assured that it will not buy back at Rs 600 unless share price reaches that on the stock markets.

Ramesh Sanka of DLF said today the land bank will take care of our requirements for the next ten years, hence this is one of the best ways to utilize our surplus cash flow and to also give positive signals that the money that the company is earning is being put to the use of the shareholders.

Excerpts from the press conference:

On total expenditure:

One sense that DLF is having is most of the land bank has already paid that. In the past, the surplus cash was spent towards the acquisition of the land. So today the land bank will take care of our requirements for the next ten years hence this is one of the best ways to utilize our surplus cash flow and to also give positive signals that the money that the company is earning is being put to the use of the shareholders.

On receivables:

We have enough cash that is coming up and we have enough generations to take care of any opportunity that comes. Not only existing buildings and existing constructions or existing hotels, but even any new opportunities if there are.

On fund raising activities:

The actual sales itself is growing at a phenomenal rate as the quarter results are coming up, which will explain how the funds are getting generated.

On financials:

The financials will be out in the next couple of weeks so you can wait and watch for that.

On slowdown:

At least, DLF has not faced any slowdown.

On liquidity crunch:

If any company has a liquidity crunch they will never go for a share buyback. The clear signal that it is giving is that we are having enough funds, enough resources to go ahead.