Cosmo First Shares (formerly Cosmo Films) rose 8% to Rs 814 on the BSE in intraday trade on Tuesday, having gained 17% in the past two sessions. Shares rose after the company’s board meeting on Thursday, December 1, announced that it would consider a share buyback proposal.

Cosmo First said on November 28: “A meeting of the company’s board of directors is scheduled for Thursday, December 1, 2022, to consider, inter alia, a proposal to repurchase shares in the company and other necessary/incidental matters.”

Despite a rebound over the past two days, shares of Cosmo First have fallen nearly 30% over the past six months, underperforming the broader market, while the S&P BSE Sensex has gained 14.5%. It touched a 52-week low of Rs 657.95 on November 15.

The main goal of a share repurchase plan is to stem the decline in stock value by reducing the supply of shares, which essentially drives up the stock price through a better price-to-earnings (P/E) ratio.

Cosmo First is a global leader in speciality films and an emerging player in speciality chemicals (masterbatches, adhesives, coatings and textile chemicals) with a digital-first omnichannel pet care business under the brand name “Zigly”.

For the July-September quarter (Q2FY23), Cosmo First posted a weak set of numbers, with profit after tax down 24.7% YoY to Rs 73 crore, while EBITDA margin contracted 408 basis points to 15.93%.

According to the company, the short-term commissioning of multiple new production lines in India, coupled with the reduction in orders from overseas customers (geopolitical crisis, supply chain adjustment and exchange rate fluctuations), has led to disruption of the overall supply and demand pattern and profit margins.

“Margins of overseas subsidiaries are also under pressure due to rising raw material costs and weaker foreign currencies against the US dollar, especially in Japan and Korea. The near-term outlook for non-speciality films may be challenging, and the company will continue to expand growth in speciality films,” it added.