Rane Brake advances 12% as board approves buyback at Rs 825 via open market

The company's EBITDA margin improved by 743 basis points to 21.0 per cent for Q2FY21 as against 13.6 per cent in Q2FY20.

Shares of Rane Brake Linings moved higher by 12 per cent to Rs 715 on the BSE in the intra-day trade on Thursday after the company's board approved buyback of shares at Rs 825 per share via open market.

In the past three days, the stock of auto ancillary company has rallied 23 per cent after the company announced the share buyback plan. At 01:11 pm, it was trading 9 per cent higher at Rs 696, as compared to a 1.1 per cent decline in the S&P BSE Sensex.

“The board has approved buyback of the company's fully paid-up equity shares of Rs 10 each, from the open market through stock exchange mechanism, for a maximum price of Rs 825 per equity share up to an aggregate amount not exceeding Rs 22 crore excluding transaction costs and applicable taxes,” Ranke Brake Lining said in an exchange filing.

Meanwhile, the company reported a strong performance for the quarter ended September 2020 (Q2FY21), as net profit increased by 54.7 per cent at Rs 11.5 crore on a year-on-year (YoY) basis. Total revenue; however, grew 3.9 per cent at Rs 108 crore over the previous year quarter. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin improved to 21.0 per cent for Q2FY21 as against 13.6 per cent in Q2FY20, an increase of 743 basis points (bps).

The favourable material price movement and product mix helped margin improvement. While there was also a one-off selling price increase recovery from customers during the quarter, the company said.

With the gradual opening of the economy, the management saw a pickup in the demand, and OEMs production levels gained momentum anticipating festive sales.

“The plant operations team effectively handled the production ramp-up despite the supply chain and labour availability challenges. The cost reduction measures and lower material prices helped in margin improvement. We remain cautiously optimistic about the sustenance of the demand post festive season,” said L. Ganesh, Chairman, Rane Group.