The market has not been kind over the last two years. Prices have corrected. Valuations have cooled off. Many stocks that once traded at a premium are now trading at far below their highs.
The Macro Pivot: From Promoter Selling to Corporate Repurchases
In a bull phase, promoters usually sell. They ride strong valuations and unlock gains. That trend played out clearly. As per Kotak Neo, India’s promoters took $56 billion in cash from the table in 2024 and 2025, when valuations were high.
But the mood has shifted now. Lower valuations are beginning to change behaviour. Buybacks are slowly coming back into focus. Promoters have bought shares worth more than $4 billion so far this year.
Companies tend to step in when they believe their stock is undervalued. It is a quieter signal, but often a stronger one. Management is willing to deploy cash to support the stock. The regulator is also nudging this shift.
The Securities and Exchange Board of India has proposed reviving the open market buyback route. This could make the process more flexible for companies. There is another layer to this. Buybacks are not just about signalling. They reduce the equity base. That, in turn, can lift return ratios. For companies with surplus cash, this becomes a capital allocation decision.
The Buyback Arbitrage: Stocks Trading Below Corporate Value
And right now, an interesting setup is emerging. A few companies have announced buybacks. Yet their stocks continue to trade up to 25% below the buyback price. Against this backdrop, we examine three companies that have recently announced buybacks.
#1 Kajaria Ceramics: A 25% Premium Bet on Organized Market Gains
Kajaria Ceramics is the largest manufacturer of ceramic and vitrified tiles in India. The company has a total annual tile production capacity of 87.80 million square meters (MSM). It has a manufacturing footprint with nine plants. Kajaria has diversified into bathware (sanitaryware and faucets) under brands such as Kerovit, as well as into tile adhesives and plywood.
Capital Allocation: Why the ₹297 Cr Buyback Trumps Dividends for ROE
The company has announced a ₹297 crore equity share buyback, subject to shareholder approval. Kajaria will buy back 21.5 lakh equity shares at ₹1,380 per share, approximately 25% higher than its current market price of ₹1,100.
Kajaria said it has significant cash on its balance sheet, which exceeds its CAPEX. Therefore, a buyback was chosen because it is a more tax-efficient way to return capital to shareholders than dividends. It will also help improve the company’s return on equity (ROE). This also reflects its strong financial position and confidence in its long-term fundamentals.
Financial Health: 44% EBITDA Growth Amid 196 Bps Margin Expansion
From a financial perspective, total sales increased 4% to ₹4,830 crore, driven by modest growth in sales volumes. EBITDA (earnings before interest, tax, depreciation, and amortization) grew 36% to ₹865 crore, while margins expanded 400 bps to 18%. Net profit increased 62% to ₹487 crore.
The Morbi Shift: Supply Headwinds in the Unorganized Sector Fuel Kajaria’s Market Share
Meanwhile, Kajaria is seeing strong demand momentum from January 2026. The unorganized sector, especially in Morbi, faced major headwinds due to high labor costs, cash flow issues, a 35-40% cost increase following a March plant shutdown, and rising spot gas prices. This reduced supply and competition, benefiting organised players like Kajaria.
Kajaria also raised prices by approximately 12-17% in March and April to offset rising gas costs. Cost optimization, improved sales realization, and operational efficiencies across the production and supply chain also improved margins. Management is highly optimistic regarding future growth.
Growth Guidance: Targeting 19% Margins and Q2FY27 Capacity Expansion
The company is confident of achieving EBITDA margins between 18% and 19% going forward. It expects strong growth as all its plants are currently operating at 100% capacity. A new tile adhesive manufacturing unit with a capacity of 9,000 MT/month in Tamil Nadu, expected to be operational by Q2FY27.
#2 Windlas Biotech: Leveraging a 100% IP Portfolio for CDMO Dominance
Windlas Biotech is a leading Generic Formulations Contract Development and Manufacturing Organization (CDMO) in India. It operates across all stages of the Generics Value Chain, focusing on formulation development, clinical approvals, manufacturing, and marketing. CDMO accounts for 73% of the total revenue.
The CDMO Edge: Owning 100% IP in a ₹666 Crore Revenue Engine
Windlas is a trusted partner to the pharmaceutical industry, servicing 7 of the top 10 and 16 of the top 20 Indian pharmaceutical companies. A major competitive advantage is that Windlas invests in its own formulation technology and owns the Intellectual Property (IP) rights for almost 100% of the CDMO products it supplies.
Shareholder Yield: Decoding the 15% Premium and 2.2% Equity Retraction
On 17 April 2026, the Board of Directors of Windlas Biotech approved a major proposal to buy back its fully paid-up equity shares. The company plans to buy back up to 4,70,000 fully paid-up equity shares, which represents 2.2% of the total paid-up equity share capital.
The buyback price is ₹1,000 per equity share, representing a premium of around 15% from the current price of ₹868. The total buyback size is ₹47 crore. This amount represents 9.80% of the company’s total paid-up equity share capital and free reserves. This followed an earlier buyback at ₹325 per share in mid-2023.
From a financial standpoint, revenue in 9MFY26 increased by 19% year-on-year to ₹666 crore. CDMO business grew by 19% to ₹487 crore. EBITDA grew by 16% to ₹79 crore with margins at 11.9%. Consequently, net profit grew by 13% to ₹50 crore.
Operational Scale: Retrofitting Plant 6 to Unlock ₹1,000 Cr Revenue Capacity
Looking ahead, Windlas is retrofitting its recently acquired Plant 6 facility with next-generation capabilities. Mechanical completion of Plant 6 was expected by the end of FY26, bringing its revenue capacity to ₹1,000 crore. In addition, the company has incremental space for further capacity expansions, such as s scaling its newer injectables facility.
Vertical Integration: Aggressive Client Acquisition and Injectables Scaling
Windlas plans to drive sustainable growth across its verticals. It aims to deepen engagement with existing clients while hunting for new ones. Growth will also be fueled by expanding the product portfolio and investing in pipeline products, among other initiatives.
#3 Jagsonpal Pharmaceuticals: A High-ROCE, Asset-Light Play in Gynaecology
Jagsonpal Pharmaceuticals develops and sells branded/trade generics and over-the-counter medicines. It specializes in four medical segments: Gynaecology, Orthopaedics, Dermatology, and Pediatrics. Gynaecology is Jagsonpal’s largest segment, contributing to roughly half of its business, followed by Orthopaedics (25%).
Portfolio Power: Dominating the Gynaecology and Orthopaedic Verticals
Jagsonpal relies heavily on a competitive power-brand portfolio. Its top 10 brands contribute approximately 58%-60% of its total revenue, providing both scale and stability to the business. Impressively, 9 out of these 10 top brands rank within the top 5 in their respective molecule categories across the industry.
Buyback Math: Decoding the ₹40 crore Offer and May 4 Record Date
The company is buying back up to 16.0 lakh fully paid-up equity shares, which represents 2.39% of its total equity shares and 7.3% of its non-promoter shareholding. The maximum buyback size is set at up to ₹40 crore. This amount represents 18.35% of the company’s paid-up equity share capital and free reserves.
Efficiency Gains: Why Zero CAPEX is Driving ROCE to 25.7%
The shares will be bought back at ₹250 per share. This price represents a premium of around 40% over the market price as of the buyback announcement date (12 March 2026). The Record Date to determine eligible shareholders and their entitlements is 4 May 2026. Still, the buyback price is even 20% above the current price of ₹208.
The board’s decision to initiate the buyback is driven by several key factors. Jagsonpal operates an asset-light business model that requires negligible CAPEX. As a result, it has generated robust free cash flows, accumulating over ₹197 crore in free cash between FY23 and FY25. The board believes retaining excess cash at low bank yields defeats the objective of capital efficiency.
The RoCE and RoE Boost
By reducing the equity base, the company expects significant improvements in its financial metrics. Return on Capital Employed (ROCE) is projected to jump from 22.0% to 25.7%, and Return on Equity (ROE) is expected to increase from 16.2% to 18.9%.
From a financial perspective, revenue in FY26 grew by 7% year-on-year to ₹287 crore. Operating EBITDA increased by 5% to ₹61 crore, maintaining a margin of 21%. Operational net profit (excluding exceptional items) grew year-on-year by 19%, driven by the normalization of ESOP costs.
2026 Outlook: 10 New Launches to Outpace Pharma Market Growth
The company aims to consistently grow at a pace 1.5 times that of the Indian pharmaceutical market. Both the Gynecology and Dermatology segments are experiencing strong doctor engagement and rising prescription volumes. Jagsonpal also plans to launch 9 to 10 new products or brand extensions this year.
Valuation Verdict: Strong ROE vs. Premium Pricing
While the ROCE of all three companies is strong, ROE is moderate. In terms of valuation, Kajaria is trading at a discount relative to both its historical and industry median multiples. Windlas is trading at a discount to the industry median but at a premium to its 5-year average.
Jagsonpal is trading broadly in line with the industry, and at a discount compared to its historical valuation.
| Valuation Comparison (X) | |||||
| Price-to-Earnings Multiple | Return Ratios | ||||
| Company | Company | 5Y Median | Industry Median | RoCE (%) | RoE (%) |
| Windlas Biotech | 27.7 | 19.3 | 30.2 | 17.0 | 12.8 |
| Jagsonpal | 31.1 | 36.1 | 22.0 | 16.2 | |
| Kajaria Ceramics | 32.6 | 48.1 | 36.5 | 23.3 | 17.9 |
Buybacks come when companies believe the market is undervaluing them. And when the stock still trades below the buyback price, it reflects a gap between perception and conviction. That gap is where early opportunities often emerge. Not the kind that stands out immediately, but the kind that slowly builds as confidence returns and the market reassesses value.
Meanwhile, keep these stocks on your watchlist.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities, or other related investments of issuers and/or companies discussed therein. The articles’ content and data interpretation are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources, and only after consulting such independent advisors as may be necessary.