This smallcap pharma major to consider its 5th share buyback tomorrow

We are amidst the earnings season and it is usually at this time that India Inc. also decides on corporate actions relative to their financial health. Likewise, midcap pharma company Ajanta Pharma alongside its quarterly results announcement tomorrow i.e. May 2, 2024 (Thursday) will also be considering share buyback.

The company in its exchange filing said that in continuation to our intimation dated April 22, 2024 about meeting of the Board of Directors of the Companyscheduled to be held on Thursday, May 2, 2024, we hereby inform that at the said meeting,the Board will also consider a proposal for buy-back of Equity Shares of the Company and other matters incidental and necessary thereto, in accordance with the applicable provisions of
the Companies Act, 2013 (including the rules and regulations framed thereunder), the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018, asamended, and other applicable laws.

What is share buyback?

Before getting on to know the history of share buyback by Ajanta Pharma, let us have an understanding about share buyback. A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

Other well-defined objectives of share buyback can also be to prevent hostile takeover, managing dilution, changing capital structure, avoiding undervaluation of security and distribution of extra cash.

History of Ajanta Pharma share buyback

As per the BSE data, the company has initiated four share buybacks, with the last one undertaken in March 2023. The record date for the same was March 24, 2023. The company last year approved a share buyback of Rs 389 crore via the tender offer route. The pharma major agreed to buyback fully paid-up equity shares having a face value of Rs 2 each at a price of Rs 1425 per share.

Before this, the company has taken on to share buyback in 2019, 2020 and 2022.

Share price performance 

Shares of Ajanta Pharma over the last one year have delivered a return of 69 per cent, while its year-to-date return is barely over 6 per cent.