- Zydus Lifesciences Ltd. approves ₹600 crore share buyback at ₹1,005 per share, offering a 25% premium.
- 59.7 lakh equity shares, representing 0.59% of total paid-up equity capital, to be repurchased via tender offer route.
- Record date set for February 23, 2024, determining eligibility for participation in the buyback.
- Despite a slight decline in US sales, Zydus Life reports a 26.8% increase in net profit for the December quarter.
- EBITDA margin expands by nearly 200 basis points to 24.4% compared to the previous year.
- Market response sees Zydus Life shares trading 1% lower at ₹794, reflecting initial reactions to the buyback news.
Zydus Life Share Introduction:
Zydus Lifesciences Ltd. recently approved a large share buyback programme at its board meeting on Friday. The ₹600 crore buyback represents a significant move for the company and its shareholders, offering a premium price per share and demonstrating confidence in its future prospects.
The Buyback Plan:
The board’s approval authorises the repurchase of 59.7 lakh equity shares, or 0.59% of the company’s total paid-up equity capital. This repurchase will take place via a tender offer, in which the business will buy back shares at a fixed price. The buyback price of ₹1,005 per share represents a 25% premium to Zydus Life’s closing price on Thursday.
Record Date and Eligibility:
Shareholders on the record date, February 23, 2024, will be entitled to participate in the repurchase. This date is key in determining which shareholders can take advantage of this opportunity to sell their shares back to the corporation.
Financial performance and rationale:
Despite reporting a modest reduction in US revenues to $221 million from previous periods, Zydus Life retains a strong financial position. The company’s net profit for the December quarter was ₹790 crore, a significant 26.8% rise from the previous year. Furthermore, the EBITDA margin increased by approximately 200 basis points, to 24.4% from 22.5% previous year. These data highlight the company’s stability and development potential, supporting the buyback effort.
Market Response:
Zydus Life shares are down 1% to ₹794 after the announcement. This market reaction represents initial reactions to the buyback plan and continued investor sentiment over the company’s future trajectory.
Conclusion:
Zydus Lifesciences Ltd. approved a ₹600 crore share buyback to increase shareholder value and boost confidence in the company’s future potential. With a premium price per share and a strategic buyback strategy in place, Zydus Life demonstrates its commitment to maximising shareholder returns while ensuring financial stability in a volatile market. As shareholders await the implementation of the buyback, the company’s performance and strategic decisions will continue to influence its path in the pharmaceutical business.