Larsen & Toubro's Rs 10,000 Crore Buyback Offer Oversubscribed By 7.2 Times; Stock Rises

Larsen & Toubro (L&T) received massive demand for its Rs 10,000 crore worth of shares buyback as the offer oversubscribed by over seven times on the final day. Due to the impressive success of the buyback, L&T shares rallied over 1% on Tuesday.

As per the data on NSE, L&T's buyback received total bids of 22,55,00,833 shares against the offered size of 3,12,50,000 equity shares at a floor price of Rs 3,200 per share, registering an oversubscription of 7.22 times.

On Tuesday, L&T's shares zoomed by at least 1.43% to touch an intraday high of Rs 2,944.35 apiece on BSE. At the time of writing, the stock traded at Rs 2,928.45 apiece, up by 0.9% with a market value of more than Rs 4.11 lakh crore.

L&T's buyback opened on September 18 and closed on September 25. Notably, L&T reduced the maximum number of Equity Shares to be bought back by the company to over 3.12 crore equity shares representing 2.22% of the total paid-up equity shares. Earlier, the buyback size was to the tune of over 3.33 crore equity shares.

Further, L&T increased its buyback price to Rs 3,200 per share from earlier Rs 3,000 per share.

One of the key objectives of L&T's buyback was to enhance the return on equity (ROE) and thereby maximise shareholder value. Return on equity capital to the shareholders in the form of a Buyback of shares of the company is a step in that direction. Also, the objective of the buyback is to improve return on equity and maximize shareholder value.

For the buyback, companies like JM Financial and Axis Capital were the managers of the buyback, while KFin Technologies was the registrar.

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.

On Trendlyne, L&T is among the mid-range performers which means that these stocks are packed with high durability, but midrange valuation scores and midrange momentum. These stocks are considered financially durable, but in the middle of the road in terms of how much momentum the stock has in the market, and how expensive it is.

Also, the stock's Relative Strength Index (RSI) and Money Flow Index (MFI) indicators are in mid-range at 65.5 and 68.1 respectively. Its price-to-book value and PE TTM are also below the industry median at 3.98 and 36.6 respectively. 1-year Beta is at 0.86 for the stock, signalling low volatility.

In the last six months, Trendlyne highlighted that 2 brokerages have upgraded their target on the stock, while 1 brokerage downgraded its target. Meanwhile, the average broker target on L&T stock is at Rs 2,790.56 apiece, hinting at a drop of nearly 5% ahead.

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