Cyber Security Stock Zooms 20% Post Buyback Announcement

Last week on Friday, Quick Heal Technologies in an exchange filing notified that the company's board will announce its Q1 results in a board meeting scheduled later this week.

Apart from Q1 results, the company's board will also consider and approve the proposal for buyback of shares on 21 July, Thursday.

Owing to this, shares of the company have zoomed 20% today.

A word about Quick Heal Technologies

Quick Heal Technologies is one of the dominant players in the cyber security space.

As cyber-attacks continue to grow in scale and sophistication in India, Quick Heal Technologies has been 'quick' to solidify its presence in the cyber security space.

This 27-year-old, Pune based company is a name that is synonymous with anti-virus software in India. It started out as a bootstrapped start-up in 1995 and has today evolved into a 360 degree cyber security solutions provider in India.

With flagship products like Quick Heal and Seqrite, the company has forayed into a space that caters to both retail and enterprise level security solutions.

With its range of offerings on data encryption and data loss prevention, endpoint security, network security, enterprise mobility management and server protection the company boasts of a clientele spread across retail, enterprise, SMB, and governments.

Quick Heal's history of buying back shares

This is not the first time Quick Heal has offered to buy back shares.

In April 2019, the company came out with its maiden buyback offer with a buyback offer amount of Rs 1.8 bn.

Back then, the company had bought 9% of its total equity or 6.4 m shares at a price of Rs 275 per equity share.

Later in May 2021, Quick Heal announced its second buyback for an offer size of Rs 1.6 bn.

Here, the company bought back 6.3 m shares at an average price of Rs 245 per equity share.

A primary reason for companies to opt for buyback is its too much cash on books and low investment. Usually, IT companies are sitting on huge amounts of cash and they reward shareholders by buybacks. Case in point is Quick Heal.

Another reason for conducting a buyback is to improve valuations. When a company buys back shares, it results in reduction of the number of shares outstanding. In result, this improves the earnings per share (EPS) and return on equity.

Companies also tend to send strong signals by way of buybacks. As the buyback price is above the current price of the stock, people tend to believe that the management is confident on growth prospects that's why it has set the price so higher than the current price.

Quick Heal's buyback price will be released later this week on 21 July.

Speaking of buybacks, check out the below video where lead smallcap analyst at Equitymaster Richa Agarwal talks about the 14 stocks to keep on your watchlist from a buyback perspective.

How the stock of Quick Heal has performed recently

Quick Heal share price opened the day 10% higher at Rs 185 against Friday's close of Rs 167.

As the session progressed, Quick Heal shares extended gains and surged 20%.

Quick Heal has a 52-week high price of Rs 320 touched last year in August while it has a 52-week low quote of Rs 144 touched in June 2022.

Over the past one year, shares of the company have fallen by 35%, even after today's spectacular gains.

On a YTD basis, shares are down 19%.

At the current price of Rs 199, the stock trades at a PE multiple of 13.7 times and a price to book multiple of 1.6 times.

Quick Heal is well positioned to leverage its strengths to capture future opportunities with a growing product portfolio.

The company's strong and experienced management and a debt free balance sheet will help it further strengthen revenues and profits.

Quick Heal has a promoter holding of 72.8%. To know more, check out Quick Heal's latest shareholding pattern.

Also check out Quick Heal company fact sheet and quarterly results.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...