GHCL Share Buyback at Rs 250 Apiece

GHCL share buyback at Rs 250 apiece

Gujarat Heavy Chemicals (GHCL) share price lost nearly 2% to Rs 196.45 as investors feel disappointed by the company’s share buyback plan.

On Thursday, the Board of GHCL at its meeting approved buyback of equity shares of the company at a maximum price of Rs 250 per share for an aggregate amount of Rs 60 crore.

The maximum number of equity shares to be bought back would be 32 lakh equity shares representing 3.26% of the existing paid-up equity share capital of the company.

GHCL is a diversified player with a presence in chemicals, textiles and consumer products; and is a leading manufacturer of Soda Ash in India, having an annual production capacity of 8,50,000 metric tons, which contributes to almost 29% of the annual domestic requirement.

However, financials for in Q3 are not encouraging at all. GHCL has registered virtually a drop in revenues to Rs 840 crs from Rs 847 crs in Q3 last year, 

Operating EBIDTA at Rs 174.11 crs vs Rs 202.85 crs is down by 14% YoY followed by a net profit of Rs 97 crs from Rs 99 crs in Q3 last year.

The operating margin in Q3FY20 was down to 20.71% from 23.94% down by 322  bps.

In Q3 FY20 both the chemicals and home textiles business underperformed with margins getting hit in this period.

Net net we understand that the Buyback announced by the company via an open market offer will not be seen as a major driver for the stock in the short term as unless operating metrics improve this small buyback of Rs 60 crs will not have any material impact on earnings ahead. 

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