MUMBAI: Shares of Eclerx Services surged on Monday after the company's board approved a share buyback proposal.
The board has approved the buy-back of company's equity shares for an aggregate amount not exceeding ₹1,095 million, at a price not exceeding ₹550 apiece.
The buy-back price is 15.47% premium to the Friday's close of ₹476.30.
At 1245 pm, the Eclerx Services stock traded at ₹502.40, up 5.2% from its previous close, while the benchmark Sensex was up 1.2% at 36,463.57. The stock had touched a high of ₹527.50 earlier in the day.
As of 31 March, promoters held 50.76% in the company, while mutual funds held 21.11%, followed by foreign portfolio investors with 17.56% and the public shareholding at 5.96%.
During the financial year 2019-20, Eclerx had concluded buy-back of 1.75 million equity shares of ₹10 each, at price of ₹1,500 apiece, aggregating ₹262 crore.
The primary objective of a share buy-back is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings multiple.
Since the beginning of 2020, Eclerx Services' shares have declined 9.8% compared to a 11.5% fall in Sensex. From its March lows, the stock has gained 55%.
For the quarter ended March, Eclerx Services reported a 6.4% year-on-year fall in net profit to ₹55.40 crore while net sales fell 3.9% to ₹350.93 crore.
Eclerx Services Ltd provides knowledge process outsourcing (KPO) services to global companies providing data management, analytics solutions and process outsourcing services to a host of global clients through a network of locations in India and abroad.