Bajaj Auto To Buy Back Shares Worth Rs 4,000 Crore At Rs 10,000 Apiece

The board of Bajaj Auto Ltd. has approved a Rs 4,000-crore buyback via a tender offer, in what is the second such share repurchase by the automaker in as many years.

The Chakan, Pune-based company plans to buy back 40 lakh fully paid-up equity shares of face value Rs 10 each at Rs 10,000 apiece aggregating to Rs 4,000 crore, according to an exchange filing on Monday.

In volume terms, the buyback is 1.41% of the total number of equity shares of the company. In value terms, it represents 16.33% and 14.49% of the total paid-up equity share capital and free reserves as on March 31, 2023.

“At 30% premium to the current market price, the buyback amount is really good”, Jay Kale of Elara Capital said, “but the overall impact on earnings per share seems to be on a higher side.” 

Veteran investor Deven Choksey also welcomed the buyback in a WhatsApp text to NDTV Profit, pointing to the promoter shareholding of the company. According to the exchange filing, Bajaj Auto’s promoters held 54.94% stake in the company, while public shareholding stood at 21.18%. Foreign investors, and mutual funds and insurers held 15% and 8.47% stake, respectively.  

To be sure, this is the second such share buyback Bajaj Auto has undertaken in the past couple of years. In July 2022, the company bought back shares worth Rs 2,500 crore at Rs 4,600 apiece. The repurchase was done through the open market route.

On Monday, Bajaj Auto’s shares rose 0.25% to Rs 6985.70 apiece on the Sensex even as the benchmark Sensex ended the day 0.93% lower at 71,355.22 points.