Shares of Cosmo Films moved higher by 9 per cent to Rs 468 on the BSE on Monday after the company announced a share buyback plan.
“A meeting of board of directors of the Company is scheduled to be held on Monday, October 26, 2020 to consider the proposal for buy-back of equity shares of the Company and other matters necessary/incidental thereto,” Cosmo Films said in a exchange filing today.
The stock of container and packaging company has rallied 17 per cent in the past seven trading days. It hit a record high of Rs 491 on August 20, 2020. Cosmo Films is a global leader in speciality films for packaging, lamination, labeling and synthetic paper.
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.
As of September 30, 2020, promoters held 44.15 per cent stake in Cosmo Films. Individual shareholders, on the other hand, held 39.66 per cent stake, while bodies corporate have 4.23 per cent stake and foreign portfolio investors held 3.06 per cent stake in the company, shareholding pattern data show.
Meanwhile, in the past six months, the stock has rallied 87 per cent, as against 28 per cent rise in the S&P BSE Sensex. For April-June quarter (Q1FY21), Cosmo Films had posted 52 per cent year on year (YoY) increase in EBITDA (earnings before interest, taxes, depreciation, and amortization) at Rs 93 crore and 800 basis points margin improvement at 19.33 per cent.
The management said the pent-up demand from previous quarter and supplies opening up in phased manner led to a favourable demand supply scenario and improved margins.
At 01:11 pm, the stock was trading 7 per cent higher at Rs 458 on the BSE, as compared to 0.91 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped an over 10-fold with a combined 757,000 equity shares changing hands on the NSE and BSE till the time of writing of this report.