Shares of Emami were up 7 per cent at Rs 369.45 on the BSE in intra-day trade on Wednesday after the personal care company announced the buyback plan.
Emami said in an exchange filing that the board of directors of the company is scheduled to meet on Friday, March 24, 2023, to consider a proposal for buyback of fully paid-up equity shares of the company.
The primary objective of a share buyback program is to prevent a decline in the value of the stock by reducing the supply of the stock, which essentially increases the share price through an improved price to earnings (P/E) multiple.
On Monday, March 20, 2023, Emami shares had hit a 52-week low of Rs 340.95. Meanwhile, in the past three months, the stock was down 16 per cent, compared with a 4 per cent fall in the S&P BSE Sensex. Moreover, it has declined 30 per cent in the last six months as compared to 1.5 per cent fall in the benchmark index.
Emami is one of India’s leading Fast Moving Consumer Goods (FMCG) companies, engaged in manufacturing and marketing of Personal Care and Healthcare products.
According to analysts, volume growth remains a concern for Emami, although the base is likely to be favorable going forward.
The slowdown in rural areas, where Emami has a higher presence (~55 per cent rural mix) compared to some other FMCG counterparts, has impacted topline performance in the near term, even as rural penetration continues to grow with Project Discovery. Growth should improve as rural recovery and improvements in pain management and healthcare come into play. Margins are also expected to improve due to pressure from input cost inflation, said analysts at Nirmal Bang Institutional Equities in the December quarter results update.