Indian energy conglomerate Reliance Industries reported its first quarterly profit drop in more than two years, and moved to bolster its underperforming shares by announcing a share buyback of up to 104.4 billion rupees ($2.1 billion). Reliance, India's biggest company by market value, said it would buy back up to 120 million shares at a maximum price of 870 rupees, its first share buyback since 2005 and the biggest ever in India.
At the maximum price, the buyback represents an almost 10 percent premium to Reliance's closing share price of 792.65 rupees on Friday. Reliance, which has a market capitalisation of about $51 billion, said it held cash and cash equivalents of $14 billion as of the end of December. Controlled by Mukesh Ambani, the world's ninth richest person according to Forbes, Reliance's market value tumbled 35 percent in 2011, mainly because of worries that falling output from its offshore gas fields would hurt its long-term growth.
The stock has also underperformed the main Mumbai market , which fell nearly 25 percent in the same period. Reliance posted a 14 percent fall in October-December net profit, as refining margins fell sharply. Net profit fell to 44.4 billion rupees ($883 million) for the fiscal third quarter ended December 31 from 51.36 billion a year earlier. Net sales rose 42 percent to 851.35 billion rupees.
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