Bajaj Consumer Care shares rose 5% on Tuesday. They hit an intraday high of Rs 184.65 on the BSE after the personal care products company announced that its board would meet on Friday, December 9, to consider a share buyback proposal.
Over-the-counter trading volume jumped more than threefold, with 3.6 million shares changing hands on SGX and BSE as of 12:46 pm. The S&P BSE Sensex fell 0.6% to 62,472.
“Company’s board of directors will consider the proposal to buy back the company’s paid-up share capital at its meeting on Friday, December 9, 2022,” Bajaj Consumer said in an exchange filing.
The main goal of a share buyback proposal is to stem the decline in stock value by reducing supply, which will ultimately push up the stock price through a better price-to-earnings (P/E) ratio.
Shares of Bajaj Consumer Care have outperformed the broader market recently. It has gained 10% over the past week, compared with a 0.34% decline for the S&P BSE Sensex. Meanwhile, it’s up 15% over the past month and 30% over the past six months. The benchmark index has gained 2.5% and 12% over the same period.
Over the past year, however, Bajaj Consumer Care has underperformed, falling 0.25%, while the Sensex gained 10%.
In the first half (April-September) of the current financial year 2022-23 (H1FY23), Bajaj Consumer’s profit after tax fell 31.9% year-on-year to Rs 31.70 crore, below single-digit growth. The company’s revenue rose 7.7% year-on-year to Rs 230 crore. Ebitda margins contracted sharply to 13.9% from 23.2% in H1FY22.
According to Bajaj Consumer, the hair oil market saw sluggish sales in Q2FY23 compared to last year. “Consumption slowed due to inflation headwinds. Demand fell more in rural areas than in urban areas,” the company said in its earnings report.