Aarti Drugs spikes 18% to hit 52-week high on buyback offer with sharp premium

The sharp reaction in Aarti Drugs was also fueled by strong volumes as they were significantly higher than the one-month daily traded average.

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Shares of Aarti Drugs shot up around 18 percent in early trade to a 52-week high of Rs 607.90 on July 24 after the board approved its first buyback plan. The floor price for the offer – a sharp premium to the stock’s current market price – has enthused investors, while its strong performance in the first quarter of FY24 also aided the sentiment.

The company approved plans for a buyback of 6.65 lakh fully paid-up equity shares, representing a 0.72 equity. The floor price for the buyback is set at Rs 900 apiece, which is over 72 percent higher than the stock’s closing price on Friday.

The buyback will cost the company a total of Rs 59.85 crore, and will make up 5.44 percent and 5.10 percent of the fully paid-up equity share capital and free reserves, respectively.

At 11am, shares of Aarti Drugs were trading 17.3 percent higher at Rs 598.80 on the National Stock Exchange. Trading volumes were also strong as 45 lakh shares changed hands on the exchanges, significantly higher than the one-month daily traded average of 5 lakh shares.

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The drugmaker reported a positive all-round growth in the April-June quarter. Its bottomline grew 38 percent to Rs 47.97 crore, up from the Rs 34.78 crore a year back, while its topline was jumped 6 percent on-year to Rs 661.11 crore from Rs 621.96 crore. The rise in revenue was attributed to over 18 percent growth in API (Active Pharmaceutical Ingredients) volumes.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin expanded to 12.7 percent in the June quarter from 10.8 percent last year. The management sounded optimistic for the coming quarters as it expects improved margin levels each quarter from hereon as the input price are seen to be stabilised.

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