Companies join share buyback trend as valuations fall to decade low

• Buybacks come as KSE-100 trade at lowest PER since 2008.
• Lucky Cement, Habib Bank are among those buying back shares.
• "This is biggest buyback wave in Pakistan’s history," analyst says.

Companies in Pakistan are increasingly looking to buy back shares after valuations fell to their lowest level in at least a decade as the country bids to secure an International Monetary Fund (IMF) bailout programme for avoiding default, Bloomberg reported Tuesday.

Lucky Cement Ltd, owned by one of Pakistan’s largest conglomerates, and Habib Bank Ltd, the biggest lender by deposits, today both announced plans to buy back shares, sending their stock up by the daily limit. They join at least five other companies in planning to repurchase shares in the market.

The buybacks come as the KSE-100 Index trades at its lowest price-to-earnings ratio (PER) since 2008, according to Faisal Bilwani, a trader at Alfalah CLSA Securities.

Pakistan is seeking IMF support to avoid a default on its debts. A ban on non-essential imports has triggered production halts in several industries.

“This is the biggest buyback wave in Pakistan’s history and it’s expected to continue with more companies doing the same,” said Zubair Ghulam Hussain, chief executive officer at brokerage Insight Securities Pvt.

Lucky Cement plans to buy back up to 7.6% of its shares for as much as 10.2 billion rupees ($36 million) in its second repurchase within a year. Habib Bank announced that its largest shareholder intends to spend 3.5 billion rupees to reacquire stock. Shares of both climbed 7.5%, trimming their 12-month losses to 24% and 28%, respectively.

Among other companies that have announced buybacks are Bank Alfalah Ltd, Maple Leaf Cement Factory Ltd, and NetSol Technologies Ltd.

Moody’s Investors Service in March downgraded Pakistan to its lowest rating, citing rising risks of the nation not being able to secure financing in time to avoid a default.