TD Power Systems extends gains as board mulls share buyback proposal

The stock surged 19% to Rs 137, extending its Friday's 5% gain on the BSE after the company said that its board will meet on Wednesday, September 26, to consider share buyback proposal.

Shares of TD Power Systems have surged 19% to Rs 137 per share in early morning trade on Monday, extending their 5% gain on the BSE on Friday after the company said that its board will meet on Wednesday, September 26, to consider share buyback proposal.

“The meeting of board of directors of the Company will be held on Wednesday, September 26, 2018, inter alia, to consider a proposal for buy back of equity shares of the Company including matters related/incidental thereto and any other matter as the Board of the Directors may decide during the course of the Meeting,” TD Power Systems said in a BSE filing. The company made the announcement on Friday after market hours.

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 P/E multiple. The other objective is to improve earnings per share (since the same dividend amount is now distributed among fewer shares).

Despite an over 20% rally in past two trading days, the stock of TD Power Systems has underperformed the market by falling 35% in past six months. It hit an all-time low of Rs 110 on Wednesday, September 19, 2018, on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was up 12.6% during the past six months.

At 09:57 am; the stock was trading 8% higher at Rs 124 against 0.39% fall in the benchmark index. A combined 163,241 equity shares changed hands on the counter on the NSE and BSE so far.