Rane Brake Lining in focus; stock advances 13% on share buyback plan

Shares of Rane Brake Lining surged 13 per cent to Rs 659 on the BSE in the early morning trade on Tuesday after the company said its board will meet on Thursday to consider share buyback proposal.


“The exchange may please note that the board of directors at its meeting convened on October 15, 2020, is scheduled to inter-alia consider a proposal for buyback of equity shares of the Company and matters connected thereto,” Rane Brake Lining said in an exchange filing.


In the past six months, the stock of the auto ancillary company rallied 62 per cent, as compared to a 30 per cent rise in the S&P BSE Sensex. However, in the past three years, it has underperformed the market by falling 46 per cent, against 26 per cent gain in the benchmark index.


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 price to earnings (P/E) multiple.


As of September 30, 2020, the promoters held 66.99 per cent stake in Rane Brake Linings. Individual shareholders held 21.61 per cent stake, while insurance companies have 9.52 per cent holding in the company, shareholding pattern data shows.


At 09:34 am, the stock was trading 9 per cent higher at Rs 636 on the BSE, against a 0.12 per cent rise in the S&P BSE Sensex. Rane Holdings (up 7 per cent at Rs 442), Rane Engine Valves (up 5 per cent at Rs 200), and Rane Madras (up 4 per cent at Rs 205) are other stocks from the Rane group that were trading higher on the BSE.