Engro completes Rs11.6bn share buyback exercise

Engro Corporation Ltd said on Tuesday it has completed a buyback exercise worth Rs11.6 billion, which began on Feb 3, at spot prices prevailing on the Pakistan Stock Exchange (PSX). The 39.5 million shares that the company has recouped from the stock market in a little less than six months will now be cancelled to improve the earnings per share of the company. The practice of listed firms buying back their shares is becoming increasingly popular. The total number of shares goes down once a company conducts a share buyback. As a result, its break-up value and profit per outstanding share improve along with many other key financial indicators. The conglomerate with stakes in power generation, fertiliser, food, chemicals and commodities bought back 6.8 per cent of its shareholding from the stock market at a weighted average price of Rs293.60 per share. In dividend-adjusted terms, the average price comes to Rs252.90 per share. According to Arif Habib Ltd CEO Shahid Ali Habib, the transaction marks the largest share buyback held on the PSX. The company used the funds from its “distributable profits” for the transaction. The soon-to-be-cancelled shares consist of 13.7pc of the company’s free float, which is the shareholding that’s in the hands of public investors as opposed to the locked-in shares held by the sponsors.