Novartis India received the board’s approval for its proposed share buyback program. The company is gearing up to buy back up to 12.26% stake from the markets at a price of Rs 670 per share. “The company’s board has approved a buyback proposal for purchase by the company of up to 34.5 lakh equity shares of Rs 5 each at a price of Rs 670 per share aggregating to Rs 231.15 crore,” Novartis India said in a regulatory filing. The promoters also plan to participate in the buyback. Share of Novartis India fell by more than 8% to hit the day’s low at Rs 626 on Monday afternoon.
As of June 2017, the promoters held 73.4% stake in Novartis India, as indicated by regulatory filings.The public shareholders hold the remaining 26.6% stake, of which 20.5% holding are with the individual shareholders. Earlier, in September 2016, Novartis had bought back 3.82 million shares of the company at a price of Rs 760 per share.
Shares of Novartis India have had a disappointing run at the bourses so far with returns of 1.3% since January. However, the BSE Healthcare Index has posted negative 5.2% returns in the year. Novartis India had posted abysmal financial results for the Apr-Jun quarter. Net profit of Novartis India declined 63.14% to Rs 7.03 crore in the quarter ended June 2017 as against Rs 19.07 crore during the previous quarter ended June 2016. Sales declined 32.98% to Rs 114.81 crore in the quarter ended June 2017 as against Rs 171.31 crore during the previous quarter ended June 2016.
According to CLSA, pharma space may bottom out in the next 5 months. Moving on to the outlook for various sectors, CLSA SAYS that IT has become a low growth sector, and investors should not expect double digit growth going forward. CLSA predicts that the growth will be tepid at 6-8% going forward.