JB Chemicals surges 12% as board mulls share buyback proposal

The stock rallied 12% to Rs 338 on the BSE in intra-day trade after the company announced that its board will meet on August 31, to consider a share buyback proposal.

JB Chemicals & Pharmaceuticals has rallied 12% to Rs 338 on the BSE in intra-day trade after the company announced that its board will meet on August 31, 2018, to consider a share buyback proposal.

“The meeting of the board of directors of the Company is scheduled on August 31, 2018 at which the board will consider the proposal for Buy-back of fully paid-up equity shares by the Company and other matters incidental thereto,” JB Chemicals said in a statement.

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 P/E multiple. The other objective is to improve earnings per share (since the same dividend amount is now distributed among fewer shares).

Thus far in the calendar year 2018, JB Chemicals had underperformed the market by falling 9% as compared to 12% rise in the S&P BSE Sensex till Tuesday.

At 03:18 PM; the stock was trading 8% higher at Rs 328 on the BSE, as compared to 0.19% rise in the S&P BSE Sensex. The trading volumes on the counter jumped more than 10-fold with a combined 1.23 million equity shares changed hands on the BSE and NSE so far.