Aarti Drugs opened strong and rose over 6% to hit an intraday high at Rs.708; it has come off this level and is now trading at Rs.690, up 3.5%. Its 52-week high is at Rs.1025.
The company announced today morning that its Board is scheduled to meet on the 19th of March to consider buy back of shares.
Promoters currently hold 60.20% stake in the company.
Generally, buyback takes place at a price higher than the current market price of the stock because the company believes its shares to be undervalued, as also as an incentive to boost shareholder participation in the buy-back.
Investors usually cheer such buybacks as they understand that the company doesn’t intend to do something wasteful like making an unwise acquisition or a non-resourceful capital expenditure with the excess cash.