Mumbai: Mumbai-based generic drug maker Ipca Laboratories Ltd is considering a share buy-back to boost investor sentiment in a stock that has lost 43.42% of its value so far this year.
The firm, which plans to use a portion of its Rs600 crore cash reserve to fund the repurchase, will decide the price for the buy-back and the size of its investment at a board meeting on 11 November, executive director A.K. Jain said.
“A share buy-back makes sense now as the valuation is low, and it may also help (in) boosting shareholder value,” he said.
Ipca shares closed at Rs383.55 on the Bombay Stock Exchange (BSE) on Friday, nearly half the Rs760 per share on 10 January when the stock was at a 52-week high. On Saturday, Ipca informed BSE that its board would meet to consider the repurchase.
Buying back shares from the open market at a premium could help support the stock in a bear run.
“Since the company’s cash reserve position is strong at present, this can be better utilized to send out a message to investors and prevent the stock from falling further, though not all such offers succeed in doing this,” said a sector analyst with a brokerage. He didn’t want to be identified.
Promoters in Ipca currently hold 46.7% of the company.