Dr Reddy's Lab gains as board approves share buyback proposal

The stock gained 4% to Rs 2,973 after its board approved share buyback at a price not exceeding Rs 3,500 per share.

Shares of Dr Reddy’s Laboratories has moved higher by 4% to Rs 2,973 on the BSE after the drug maker said it will buyback share at a price not exceeding Rs 3,500 per share subject to regulatory approvals.

The board of directors of the company at their meeting held today has approved a proposal to buyback of equity shares of the company for an aggregate amount not exceeding Rs 1,569 crore and at a price not exceeding Rs 3,500 per share, Dr Reddy’s Laboratories said in a press release.

The buyback should be 14.9% of the total paid-up equity capital and free reserves of the company as on March 31, 2015.

The buyback shall not be made from the promoters and promoters group of the company, it added.

Dr Reddy’s said the buyback is proposed on account of the Company’s strong cash flow position and is expected to be earning per share (EPS) accretive contributing to an overall enhancement of value of shareholders going forward.

Since February 10, the stock outperformed the market by gaining 2.5% as compared to 1.6% decline in the S&P BSE Sensex after the company announced that its board will meet on February 17, 2016, to consider the buyback of equity shares of the company.

At 03:06 PM, the stock was up 3.5% at Rs 2,962 on the BSE.  The stock hit a 52-week low of Rs 2,750 on January 21 and fallen 37% from its 52-week high of Rs 4,383 touched in October last year.

A combined 655,144 shares changed hands on the counter on the NSE and BSE so far.