Emami soars 7% as board to consider share buyback on March 24

Emami shares rose 7 percent to Rs 369.45 on the BSE in intraday trading on Wednesday after the personal care company announced a buyback plan.

The company’s board of directors is scheduled to meet on Friday, March 24, 2023, to consider a proposal to repurchase fully paid-up equity shares of the company, Emami said in an exchange filing.

The primary goal of a share buyback program is to stop the decline in a stock’s value by lowering the supply of the stock, which essentially raises the stock’s price through a better price-to-earnings multiple ( P/E).

Emami shares had hit a 52-week low of Rs 340.95 on Monday, March 20, 2023. Meanwhile, in the past three months, shares have fallen 16 percent, against a 4 percent drop in the S&P BSE Sensex. Also, in the last six months, it has fallen 30 percent, compared with a 1.5 percent drop in the benchmark index.

Emami is one of India’s leading Fast Moving Consumer Goods (FMCG) companies engaged in the manufacturing and marketing of health and personal care products.

Volume growth remained a concern for Emami, although the basis is likely to turn favorable in the future, according to analysts.

The slowdown in rural areas, where Emami has a greater presence (~55 percent rural mix) compared to some of the other FMCG peers, has affected top-line performance in the near term, even as rural penetration continues to make steady progress with the Khoj Project. Rural recovery and correction in pain management and medical care entering the base should enhance growth in the future. Margins are also expected to improve as pressure from input cost inflation eases, analysts at Nirmal Bang Institutional Equities said in their December quarter results update.