JB Chemicals gains 7% as board mulls share buyback plan

Shares of JB Chemicals & Pharmaceuticals were up 7 per cent to Rs 387 on the BSE on Thursday after the drug maker announced that its board will meet on November 12, 2019 to consider share buyback proposal. The stock is 6 per cent away from its 52-week high level of Rs 411 touched on September 9, 2019.

“The board of directors will meet on November 12 to (also) consider the proposal for buy-back of fully paid-up equity shares by the Company,” JB Chemicals said in a regulatory filing.

On October 4, the company had said the board will meet on November 12, to consider and approve unaudited financial results for the quarter ended on September 30, 2019 (Q2FY20).

With the objective to enhance shareholder value, in previous financial year 2018-19, the company had bought back 3.33 million equity shares at price of Rs 390 per share.

The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings (P/E) multiple.

The stock of JB Chemicals has underperformed the market since it touched its recent high of Rs 405 on September 13, 2019. The stock has fallen 11 per cent since then (till Wednesday), as against an 8 per cent rally in the benchmark S&P BSE Sensex, which hit a new high today.

At 10:23 am, the stock was up 6 per cent at Rs 383 on the BSE, as against a 0.1 per cent rise in the benchmark index. A combined 109,927 shares have changed hands on the counter on the NSE and BSE so far.