The maximum buyback price represents a nearly 10 per cent premium over the last closing price of Rs 792.65 on the National Stock Exchange on Friday.

“The board unanimously approved the buyback of up to 12 crore equity shares of Rs 10 each at a price not exceeding Rs 870 per equity share, up to an aggregate amount not exceeding Rs 10,440 crore from the open market through stock exchanges,” the company said.

RIL shares gained 1.04 per cent to Rs 793.35 on the BSE on Friday. RIL’s shares have been languishing on the stock exchanges in the last one year. The stock which declined by 35 per cent in 2011 underperformed the market.

The buyback — largest in India’s corporate history — is to “correct the fact that current valuation is lower relative to RIL’s historical valuation” and to align the “RIL management perception with that of the street that the stock is undervalued”, RIL said in an analysts meet.

RIL officials told analysts that cash balance is expected to remain unchanged as at the end of FY13 and no negative impact is foreseen on the long-term rating of the company. RIL has now joined other oil and petrochemicals companies in the world in buying back the shares.

“We believe buyback of share would be positive steps in utilisation of its cash balance of $14-15 billion. Based on the buyback price, the company has given 10 per cent premium on today’s closing price of Rs 792 per share, which again is in line with street expectations of Rs 850-870 per cent share,” said Anish Damania, head institutional equities, Emkay Global Financial Services.