Shares of CARE Ratings jumped 10% to Rs 457.15 on BSE in Wednesday’s trade after the company announced its board would consider a share buyback plan on July 20, Wednesday .
As of 9:38 a.m., CARE Ratings was trading up 9.6% at Rs 455 thanks to heavy volumes. By comparison, the S&P BSE Sensex rose 0.35% to 54,075 points. Over-the-counter trading volumes had quintupled with a total of around 520,000 shares changing hands on the NSE and BSE.
The stock had hit a 52-week low of Rs 402.75 on May 11, 2022. It has almost halved (down 49%) from its 52-week high of Rs 783.25 on August 3, 2021 .
Over the past six months, CARE Ratings has underperformed the market, falling 27%, compared to a 12% decline in the S&P BSE Sensex. Over the past year, it has fallen 36% against a 2.6% rise in the benchmark.
The main purpose of a stock buyback program is to stop the decline in value of a stock by reducing the supply of the stock, which essentially drives up the stock price through a best price/earnings (P/E) multiple.
For the fourth quarter ended March 2022 (Q4FY22), CARE Rating’s consolidated total revenue fell by 14.3% from Rs 85.25 crore to Rs 73.06 crore, largely impacted by the cancellation of provision last year Consolidated net profit decreased from Rs 26.49 crore to Rs 23.31 crore. The consolidated financial statements include those of CARE Ratings and its four subsidiaries.
The government has solid investment plans for FY23 and private investors have also shown encouraging investment intent. However, recent global and national uncertainties could delay the recovery of private investment, said Ajay Mahajan, MD and CEO of CARE Ratings Ltd.
“We believe that given our focus on new ratings business and exploiting new opportunities for non-rating related businesses, we should be able to stay on track to grow CareEdge as an organization. focused on analysis,” he said.
Objective: Rs 526
Support: Rs 445
With Wednesday’s sharp rise, the CARE Ratings stock broke through the upper end of the Bollinger Band of Rs 445. A hold above this level will cement its immediate support position. The stock is now testing the 20-week moving average (20-WMA), placed at Rs 475. Beyond that, the next target is seen at Rs 526 (the trendline super resistance) and Rs 538 (the 100-WMA).
(With contributions by Nikita Vashisht)