Aurobindo Pharma to consider first-ever share buyback on July 18

Aurobindo Pharma Ltd. saw a surge of around 6% today, hitting an unprecedented high after announcing its first share buyback proposal, to be discussed in a board meeting scheduled for July 18, 2024. The stock peaked at Rs.1404 per share which contrasts with a modest 0.5% increase in the NSE Nifty 50 index. A share buyback typically reduces the number of shares in the open market, potentially increasing the value of remaining shares. 

Market Performance

Aurobindo Pharma’s stock has been a performer, appreciating by 30% year-to-date and a 90% over the past year. According to the reports, Monday’s trading volume suggests possible overbought conditions . Analysts hold mixed views: 21 out of 28 recommend a ‘buy’, four suggest a ‘hold’, and three advise ‘sell’. 

Corporate Actions & Dividends

This proposed buyback  will be crucial for Aurobindo Pharma, which last engaged in major corporate action in 2015 by issuing bonus shares. The company hasn’t split its stock since 2011, when it reduced the face value from Rs.5 to Rs.1. In terms of dividends, the company has rewarded shareholders, with the highest interim dividend being Rs.4.5 per share in 2022.

Financial Results

For Q4FY24, Aurobindo Pharma reported a 79.6% rise in consolidated net profit, amounting to Rs.909 crore compared to Rs.506 crore in Q4FY23. Revenue from operations also saw an increase, reaching Rs.7,580 crore from Rs.6,473 crore. For FY24, net profit stood at Rs.3,173 crore, up from Rs.1,927 crore in FY23.

Conclusion: In conclusion, as Aurobindo Pharma gears up for its first-ever share buyback, the market is set to observe the board’s decision on July 18 which could set a new precedent for the company’s market performance and future which shows past growth highlighting its potential and making it a key player to watch in the pharmaceutical sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.