Aarti Drugs Buyback: All You Need To Know

Aarti Drugs Ltd. has announced a buyback allowing all shareholders, including its promoters, an equal opportunity to tender their shares at a premium of more than 76% to its Friday closing price.

Derivation Of Buyback Price

The buyback amount of around Rs 60 crore was derived considering 25% of the cumulative after-tax profits of last five years, adjusted for shareholder payouts, said Adish Patil, chief financial officer at Aarti Drugs.

Considering taxes on the buyback, the additional Rs 10 crore will be funded from current year profit, he said.

With regards to the premium offered on the buyback, he said that in March 2021 as well, they had done a buyback at Rs 1,000 per share, when the share price was Rs 686 apiece.

"As a company, we did not want to reduce the buyback premium that we paid in the past. Also, we have come a long way since, with regards to the capex incurred in the past two years, which is expected to commercialise by H2 FY24. We would want all shareholders to participate and benefit from the buyback."

The company is expecting that current shareholding will not change after the buyback, since it is on a proportionate basis, he said.

It had a cash and bank balance of around Rs 9 crore and other financial assets of Rs 12 crore, as on March 31. It had other current assets to the tune of Rs 90 crore.