G E Shipping surges 9% on share buyback plan, board meet on December 27

The board of directors are scheduled to meet on Monday December 27, 2021 to consider and approve a proposal for buy-back of equity shares of the company.

Shares of Great Eastern Shipping surged 9 per cent to Rs 299.85 on the BSE in Thursday’s intra-day trade after the company announced its plan for share buyback. The company said its board of directors are scheduled to meet on Monday December 27, 2021 to consider and approve a proposal for buy-back of equity shares of the company.

The stock of shipping company has corrected 42 per cent from its 52-week high level of Rs 477 touched on June 16, 2021, till Wednesday. It had hit a 52-week low of Rs 229 on January 29, 2021.

At 09:17 am; G E Shipping traded 6.5 per cent higher at Rs 293.85 on the BSE, as compared to 0.50 per cent rise in the S&P BSE Sensex. A combined 530,000 equity shares had changed hands on the NSE and BSE.

Share Buy-back is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than market price. When it buys back, the number of shares outstanding in the market reduces.

The reasons for buyback are to improve earnings per share; to improve return on capital, return on net worth and to enhance the long-term shareholder value; to provide an additional exit route to shareholders when shares are under-valued or are thinly traded; to enhance consolidation of stake in the company; to prevent unwelcome takeover bids; to return surplus cash to shareholders; to achieve optimum capital structure; to support share price during periods of sluggish market conditions and to service the equity more efficiently.

In the past six months, the stock price of G E Shipping has underperformed the market by falling 27 per cent. In comparison, the S&P BSE Sensex was up 9 per cent during the same period. In the last one year, the stock has gained 17 per cent as against a 24 per cent rally in the benchmark index.

For first half (April-September) of the current financial year 2021-22 (H1FY22), G E Shipping had reported 66 per cent year on year (YoY) dropped in its consolidated net profit to Rs 235 crore from Rs 693 crore in H1FY21. Revenue from operations de-grew 10 per cent YoY to Rs 1,654 crore from Rs 1,843 crore in same period previous fiscal.