Sun announces share buyback

On a year-on-year basis, Sun Pharma's stock is down 13.7%

Sun Pharmaceutical Industries announced a Rs 675-crore  buyback offer, to purchase up to 7.5 million equity shares. The board of directors fixed a price of Rs 900 a share, a premium of 19.7 per cent over Thursday's closing Rs 751.70.

The buyback is being undertaken to return surplus funds to the equity shareholders and, thereby, enhancing their overall return, the company stated.

It had cash and cash equivalents amounting to nearly Rs 14,000 crore at the end of FY16. Consolidated net profit was Rs 4,715 crore for the full year.  Analysts see this as a move to bolster the stock price, under pressure over the past 12 months. On a year-on-year basis, the stock is down 13.7 per cent and fared worse than the BSE Healthcare index, which declined 8.3 per cent in the period.

In April, Dr Reddy Laboratories said it would spend Rs 1,569 crore to repurchase shares at a maximum of Rs 3,500 each. And, the promoters of Lupin  have been purchasing shares from the open market.  In the June quarter so far, they've acquired 1.12 million shares, for Rs 160 crore, increasing their stake from 46.52 per cent to 46.74 per cent.

The public announcement setting out the process, timelines and other details will be issued in due course.

Sun Pharma said in line with the regulator's guidelines, 15 per cent of the buyback offer was reserved for shareholders holding equity shares having market value of not more than Rs 200,000 as on  July 15, the record date. The promoters have indicated their intention to participate in the proposed buyback in such a manner that their aggregate shareholding percentage in the company will not fall below the current proportion, the company said.