Aarti Drugs share price rose 15 percent intraday on March 19 after the company approved the buyback of equity share worth up to Rs 60 crore.
The company board has approved the buyback of up to 6,00,000 fully paid-up equity shares of face value of Rs 10 each of the company representing up to 0.64% of the total number of equity shares of the company at a price of Rs 1,000 per equity share payable in cash for an aggregate amount of up to Rs 60 crore.
The buyback will be done on a proportionate basis through tender offer to all the equity shareholders/ beneficiary owners who hold equity shares on the record date.
The board of directors has set the record date for the proposed buyback as April 1, 2021.
At 14:56 hrs Aarti Drugs was quoting at Rs 769.95, up Rs 86.85, or 12.71 percent on the BSE.
Buyback refers to the repurchasing of free-float shares of a company by the promoters.
In a buyback issue, the company pays its shareholders a fixed value per share and re-absorbs that portion of its ownership that was previously distributed among public and private investors.
The process enables the repurchase of shares from the existing shareholders usually at a higher price than the market price.
Companies do buybacks for various reasons such as ownership consolidation plan, undervalued price, or for boosting its key financial ratios making companies look more financially healthy.
The share touched a 52-week high of Rs 1,025 and a 52-week low of Rs 105.56 on 08 October, 2020 and 19 March, 2020, respectively.
Currently, it is trading 25.97 percent below its 52-week high and 618.88 percent above its 52-week low.
The company's trailing 12-month (TTM) EPS was at Rs 28.33 per share. (Dec, 2020). The stock's price-to-earnings (P/E) ratio was 26.96.
The latest book value of the company is Rs 66.72 per share. At current value, the price-to-book value of the company was 11.45. The dividend yield of the company was 0.26 percent.