RIL reported a cash profit of Rs 2305.77 crore last fiscal with a cash balance of Rs 2133 crore. The debt-equity ratio is a low 0.91. RIL has investments worth Rs 2754 crore, which would prove hand for buy-back.

However, as the equity is large at at Rs 932 crore, buy-back is unlikely to have any significant effect on EPS. In order to buy back even two per cent of the equity, the company would need Rs 270 crore. A two per cent reduction in equity would boost EPS by only Rs 0.4. To buy-back 10 per cent of the equity, the company would need Rs 1351 crore.

According to an analyst, ``The buy-back offer from RIL is likely to be restricted by the total amount rather than percentage of equity or the maximumprice.'' He expects that if there is a buy-back offer in near future, it will be in the range of Rs 200-250 crore.

But the question of buy-back to improve shareholders' value will arise only if the company is unable to find an investment opportunity which can improve the shareholder's value in long term. Considering RIL's track record of taking prudent financial decisions, a buy-back offer is unlikely to come at a price of Rs 145, which translates into a premium of 37 per cent to its book value of Rs 106.