Dr. Reddy's Labs announces share buy back, stock jumps 4%

MUMBAI:Hyderabad-based drug maker Dr. Reddy’s Labs announced a share buyback programme for a maximum Rs 1,569.4 crore at a price not exceeding Rs 3,500 per share.

In a statement to stock exchanges, the company said the price represents an 18.6% premium to the average closing price of shares for the two weeks up to February 16, 2016.

“The buyback is proposed on account of the company’s strong cash flow position and is expected to be EPS accretive contributing to an overall enhancement of value for shareholders going forward,” the statement noted. Market analysts viewed the share buyback as a move that signalled confidence in the future performance of the company.

Although questions remained on timely remediation of issues raised by the USFDA, analysts said the negative issues are largely factored in. “Ït’s telling the investors that it’s not all that gloomy,” an analyst said.