Their valuations lowest in a decade, top Pak firms join share buyback trend

Faseeh Mangi

Pakistan companies are increasingly looking to buy back shares after valuations tumbled to the lowest level in at least a decade as the nation seeks to settle a $6.5 billion bailout program to avoid default.
 

Lucky Cement, owned by one of Pakistan’s largest conglomerates, and Habib Bank, the biggest lender by deposits, today both announced plans to buy back shares, sending their stock up by the daily limit. They join at least five other companies in planning to repurchase shares in the market.
 

The buybacks come as the KSE-100 Index trades at its lowest price-to-earnings ratio since 2008, according to Faisal Bilwani, a trader at Alfalah CLSA Securities. Pakistan is seeking International Monetary Fund support to avoid a default on its debts. A ban on non-essential imports has triggered production halts by several industries.
 

“This is the biggest buyback wave in Pakistan’s history and it’s expected to continue with more companies doing the same,” said Zubair Ghulam Hussain, chief executive officer at brokerage Insight Securities.
 

Lucky Cement plans to buy back up to 7.6 per cent of its shares for as much as 10.2 billion rupees ($36 million) in its second repurchase within a year. Habib Bank announced that its largest shareholder intends spending 3.5 billion rupees to reacquire stock. Shares of both climbed 7.5 per cent, trimming their 12-month losses to 24 per cent and 28 per cent, respectively.  

Among other companies that have announced buybacks are Bank Alfalah , Maple Leaf Cement Factory  and NetSol Technologies. 
 

Moody’s Investors Service in March downgraded Pakistan to its lowest rating, citing rising risks of the nation not being able to secure financing in time to avoid a default. 

Pakistan took the crown for Asia’s fastest inflation from Sri Lanka as a weaker currency and rising food and energy costs drove price gains to a record in April. 
 

Consumer prices rose 36.4 per cent in April from a year earlier, the highest since 1964, according to data released by the statistics department Tuesday. That compares with a median estimate for a 37.2 per cent gain in a Bloomberg survey and a 35.4 per cent increase in March. 
 

The data shows Pakistan’s inflation outpaced price gains in Sri Lanka that eased to 35.3 per cent in April and is starting to show signs of recovery from an economic crisis. The Pakistani rupee is one of the worst performing currencies globally so far in 2023, declining 20 per cent to the dollar, and making imported goods more expensive.  Transport prices climbed 56.8 per centwhile food inflation quickened 48.1 per cent in April from a year earlier, data showed. bloomberg