Bajaj Auto Rs 4,000 Crore Buyback: Bajaj Firm Fixes Buyback Price At Premium To Rs 10,000 Per Share

Bajaj Group-backed 2-wheelers and three-wheelers company, Bajaj Auto has declared its share buyback plan in a board meeting held on January 8. This will be the second buyback by Bajaj Auto in less than two years. Bajaj's buyback floor price has also been fixed.

Bajaj Auto's board of directors met on January 8th to consider and approve the details of the share buyback proposal.

As per the regulatory filing, Bajaj Auto's board approved a buyback of up to 40 million shares having a face value of Rs 10 each. This represents 1.41% of the total number of Equity Shares of the company.

The buyback size is Rs 4,000 crore. The board of directors fixed the share buyback floor price at Rs 10,000 per share, which is at a premium of 43.15% from its current market price.

The buyback represents 16.33% and 14.49% of the total paid-up equity share capital and free reserves (including securities premium account) as per the audited standalone financial statements and audited consolidated financial statements of the Company for the financial year ended on March 31, 2023, respectively.

However, Bajaj Auto also said that the board or buyback committee may till one working day before the record date, increase the Buyback price and decrease the number of Equity Shares proposed to be bought back, such that there is no change in the Buyback Size.

Bajaj's board may, till one working day before the record date, increase the Buyback price and decrease the number of Equity Shares proposed to be bought back, such that there is no change in the Buyback Size.

The public announcement and letter of offer setting out the process, timelines and other requisite details will be released in due course.

As of January 5, the pre-buyback shareholding pattern of Bajaj Auto includes -- 64 shareholders in the promoter and promoter group category holding up to 155,580,309 shares or 54.94% of the company. While a total of 891 foreign portfolio investors hold 41,690,564 shares or 14.72%. Further, the public, corporations and others hold 59,963,739 equity shares or 21.18% of the company. Meanwhile, 38 mutual funds hold up to 5.25%, and insurance companies up to 3.21% stake in Bajaj Auto.

Ahead of the buyback meeting, Bajaj Auto's share price ended at Rs 6,985.70 apiece, up by Rs 17.55 or 0.25% with a market cap of Rs 1,97,820.88 crore. Last week, Bajaj Auto stock touched a new 52-week high of Rs 7,088 apiece.

The last buyback that Bajaj Auto launched was of Rs 2,500 crore between July 4th to October 10th of 2022. The floor price of this buyback was at Rs 4,600 per share.

In general terms, Buy-Back is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than the market price. When it buys back, the number of shares outstanding in the market reduces. Some of the key reasons for buyback are --- to improve earnings per share; improve return on capital, return on net worth and to enhance the long-term shareholder value; provide an additional exit route to shareholders when shares are undervalued or are thinly traded; provide an additional exit route to shareholders when shares are undervalued or are thinly traded; enhance consolidation of stake in the company; prevent unwelcome takeover bids; return surplus cash to shareholders; achieve optimum capital structure; support share price during periods of sluggish market conditions; and service the equity more efficiently, as per BSE FAQs.