NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions
Kaveri Industries has 10 crore shares outstanding at a market price of ₹250. It plans a buyback of 50 lakh shares through the tender offer route at ₹300 per share. Assuming the market capitalisation after the buyback equals the pre-buyback market cap less the amount spent on the buyback, what is the theoretical price per share after the buyback?
The theoretical price is ₹247.37 per share. Market cap of ₹2,500 crore falls by the ₹150 crore spent on the buyback to ₹2,350 crore, which is divided across the remaining 9.5 crore shares.
- A₹247.37
- B₹250.00
- C₹252.63Correct
- D₹255.00
Explanation
Pre-buyback market cap = 10 crore x 250 = ₹2,500 crore. Buyback outlay = 0.5 crore x 300 = ₹150 crore. Remaining cap = ₹2,350 crore over 9.5 crore shares = ₹247.37. Wait: 2,350 / 9.5 = 247.37, so recheck options: the correct figure is ₹247.37.
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