Shares of Tanla Platforms surged nearly 4% on September 2 after the company said its board would meet next week to consider a share buyback proposal.

“I would like to inform you that the company’s board of directors will consider the proposal to repurchase the company’s shares, including related/incidental matters, at its meeting scheduled for Thursday, September 8, 2022,” the Hyderabad-based company said in a regulatory filing.

Buybacks often lead to increased demand for shares, as companies typically buy shares at a premium to current prices to reward shareholders. Short-term traders start buying stocks to make quick money.

Shares of Tanla have been battered recently as global tech stocks tumbled. The stock is down 60% so far this calendar year. On September 2, it was trading at Rs 754, up about 4%.

The company’s revenue was also affected seasonally in the last quarter, with lower margins due to customer-specific issues and increased competition. Still, analysts remain optimistic about the counter.

HDFC Securities said Tanla Platforms’ enterprise business is expected to record 15% volume growth and a gross margin (GM) in the 18-19% range (previously 20-21%) due to increased competition.

“Platform revenue CAGR of 35%, GM’s 90%. Management is confident of expanding EBITDA margins to 19-20% over the next two quarters. We are working hard to recover margins, but are expected to be historically low”, said the broker.

It has a ‘buy’ rating with a target of Rs 1,040.