Cosmo First soars 17% in 2 days on company's share buyback plan

Shares of Cosmo First (formerly Cosmo Films) moved higher by 8 per cent to Rs 814 on the BSE in Tuesday's intra-day trade, soaring 17 per cent in the past two trading days, after the company announced that its board will meet on Thursday, December 1, to consider share buyback proposal.

"The meeting of board of directors of the Company is scheduled to be held on Thursday, December 01, 2022, inter-alia to consider a proposal for buyback of equity shares of the company and other matters necessary/ incidental thereto," Cosmo First said on November 28.

Despite the past two days' rally, the stock of Cosmo First has underperformed the market in the past six months by falling nearly 30 per cent, as compared to 14.5 per cent surge in the S&P BSE Sensex. It had hit a 52-week low of Rs 657.95 on November 15.

The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings (P/E) multiple.

Cosmo First is a global leader in specialty films, and an emerging player in specialty chemicals (Masterbatches, Adhesive, Coating & Textile chemicals) along with digital first Omni channel Pet care business under the brand name 'Zigly'.

For the July-September quarter (Q2FY23), Cosmo First had reported a weak set of numbers with profit after tax declining 24.7 per cent year-on-year (YoY) at Rs 73 crore, while EBITDA margin contracted 408 bps to 15.93 per cent.

The company said commissioning of several new production lines in India within a short span, coupled with subdued order flow from overseas customers (geo-political crisis, supply chain corrections, and currency fluctuations), led to disruption of overall demand supply scenario as well as the margins.

"Margins were also under pressure in the overseas subsidiaries due to increase in raw material costs, weakening of foreign currencies against US dollar particularly in Japan and Korea. The near-term outlook for non-specialty films could be challenging, and the Company will continue to expand on specialty films growth," it added.