Aarti Industries surges 5% on share buyback approval

MUMBAI: Shares of Aarti Industries surged almost 5 per cent on Tuesday after the company announced that the board has approved a buyback of up to 12 lakh equity shares which constitutes about 1.44 per cent of the total number of equity shares in the company.

The buyback price was fixed at Rs 800 per piece and the company has set aside Rs 96 crore (excluding transaction costs) for the buyback. The stock touched a fresh 52-week high of Rs 742.80 on Tuesday.

"When promoters buyback, it is considered a positive," said Dharmesh Kant, head of retail research, Motilal Oswal Securities. "Generally a buyback occurs when the price is falling but in Aarti Industries' case, the stock has been rising consistently which gives a further boost to confidence."

The company has fixed November 02, 2016 as the record date for the purpose of buyback of equity shares.

Promoters held a 54.80% stake in Aarti Industries, the shareholding pattern as of June 30, 2016 suggested. Individual shareholders held 27.11% while mutual funds had a 12.06% stake and the foreign portfolio investors number stood at 3.39%.

The stock has risen 10.23% in the last week, 23.92% in the last month and 41.35% since January. Peer Tata Chemicals has risen 0.19% in the last week, declined 2.36% in the last month and 34.76% since the beginning of the year.

"We are optimistic about Aarti Industries," Kant said. "The company has been doing well operationally. Is good with compliance and has a clean balance sheet. We are positive on the specialty chemicals space at large because of most Chinese companies being shut down and the tremendous growth opportunity for Indian companies."