KARACHI: Recent chan­­ges in share buyba­ck regu­lations are going to help listed companies unlock their valuations as they repurchase their own stocks through the stock exchange.

Speaking to Dawn, Topline Securities Asso­ciate Director of Research Umair Naseer said companies aim to improve their earnings per share as their total number of shares goes down and break-up values improve.

Big companies in developed economies have also ram­ped up their share repur­­chases in recent years as they carry excess cash on their balance sheets and expect the stock market to go up.

As for the Pakistan Stock Exchange, two firms have recently announced they’ll buy back their own shares using their company funds. Netsol Techn­ologies Ltd will repurchase its two million shares, constituting two per cent of its paid-up capital, currently worth Rs201m.

In addition, Maple Leaf Cement Factory Ltd has also decided to buy back up to 25m shares or 2pc of its paid-up capital worth Rs855m.

In a research report issued on Wednesday, Mr Naseer wrote that companies repurchase their own stocks sometimes to cancel them altogether or hold them as treasury stocks, which effectively reduces the number of outstanding shares on the open market.

The changes in buyback regulations were introduced via an amendment to Companies Act 2017 on Dec 4, 2021.

Published in Dawn, April 28th, 2022

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