Kohat Cement jumps on share buyback plan.

KARACHI -- The share price of Kohat Cement Company Ltd (KCCL) increased on Tuesday by 7.5 per cent, maximum allowed in a day, after it made an announcement about its upcoming share buyback exercise.

KCCL told investors on Tuesday it wants to buy back up to five million of its shares from the stock market at the prevailing price for the purpose of cancellation.

The move is aimed at improving the earnings per share of the company, it said.

Of late, many listed companies have carried out share repurchase exercises in the ready market. The total number of shares goes down once a company conducts a buyback, leading to an increase in its break-up value - the amount that the company would be worth if it was liquidated. The transaction would be worth Rs669 million at the current share price of Rs133.78. The targeted volume constitutes 2.49pc of the company's total outstanding shares.

KCCL will start buying back its shares on March 1 and keep repurchasing the stocks until August 19 or the date when the targeted volume is achieved. At the conclusion of the buyback exercise, the company's free float - shares that're available for the public to buy and sell - will have gone down from 30pc to 27.5pc.

The cement maker will use the cash from its 'distributable...