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SR: Alembic announces buy-back offer

This article was posted on Nov 16, 2008 and is filed under Stock Research

The company’s board approved the buyback plan during market hours today, 14 November 2008. Meanwhile, the BSE Sensex was down 110 points, or 1.2%, to 9,422.32. On BSE, 2.7 lakh shares were traded in the counter. The scrip had an average daily volume of 77,425 shares in the past one quarter.

The stock hit a high of Rs 40.45 and a low of Rs 35 so far during the day. The stock had a 52-week high of Rs 107.30 on 17 December 2007 and a 52-week low of Rs 24.75 on 24 October 2008.

The stock had outperformed the market over the past one month till 12 November 2008, rising 13.86% as compared to the Sensex’s 9.42% decline. It had also outperformed the market in the past one quarter, falling 18.76% as compared to the Sensex’s fall of 37.31%.

The small-cap stock has an equity capital of Rs 27.69 crore. Face value per share is Rs 2.

The current price of Rs 37.40 discounts its Q2 September 2008 annualised EPS of Rs 4.35, by a PE multiple of 8.59.

The buyback will be for a minimum of 12 lakh equity shares, with a maximum amount for buyback set at Rs 33 crore, constituting 9.69% of the paid-up capital & free reserves of the company.

Alembic is engaged in manufacturing and selling bulk drugs and pharmaceutical formulations in human and animal healthcare. It manufactures and markets antibiotics and antibacterial, cough and cold remedies, analgesic and anti-inflammatory medications, nutraceuticals and anti-diabetics.

The maximum amount of buy back shall be for an amount not exceeding Rs 3,300 lacs, constituting 9.69% of the paid-up capital & free reserves of the Company. Alembic Limited has announced that the company’s board of directors has approved a resolution to buy-back a minimum of 12,00,000 equity shares at a maximum buy back price of Rs 55/- per equity share.

The maximum amount of buy back shall be for an amount not exceeding Rs 3,300 lacs, constituting 9.69% of the paid-up capital & free reserves of the Company. The Board has appointed Edelweiss Capital Ltd as the Merchant Bankers for the buy-back program.

The buy-back proposal is being implemented in keeping with the Company’s desire to (a) to optimize returns to shareholders; and (b) enhance overall shareholder value.

The buy-back would lead to reduction in outstanding number of equity shares, and consequent increase in earnings per equity share, improvement in return on net worth and other financial ratios.

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