Given the handful of asset sale and the objective to improve return on equity, the ongoing L&T buyback plan is likely to be the first of the many expected by analyst. On Monday, the stock of India's leading engineering and construction major gained on buyback news and for the same details will be given shape in August 23 board meet.
Few important points to know of before the final offer details become available
The company's total equity as of FY 18 is to the tune of Rs. 48,776 crore and as per the Company's Act provisions, the equity can be re-purchased to the maximum of 10% upon approval by the Board and the same gets an expansion to 25% upon approval by the shareholders. So by and large, the buyback size can be up to Rs. 12,000 crore.
Offer size as per analyst and experts is expected to be restricted to the company's current divestment kitty which is worth Rs. 5,000 crore.
Acceptance ratio can fall if the buyback price announced is at 10% premium to the stock price as on Monday (closing price of Rs. 1,324) to just 2.5% for 100 shares tendered as against 3.4%.
All stakeholders will be able to participate in the buyback as the company has no promoter holding.