In a strategic move, Bajaj Auto Ltd, a leading two and three-wheeler manufacturer, gained approval from its board on January 8 for a substantial Rs 4,000 crore share buyback program. The buyback will be executed at Rs 10,000 per share, presenting a premium of 43 percent over the last closing price.
The buyback plan involves the acquisition of 40 lakh shares through the tender route, constituting 1.41 percent of Bajaj Auto’s outstanding shares. Prominent stakeholders, including the company’s promoters holding a 54.94 percent stake, are set to participate in the buyback.
The Board has established a dedicated Buyback Committee, granting it the authority to take necessary actions related to the buyback at its discretion. The process is contingent upon shareholder approval through a special resolution via a postal ballot, with details such as record dates to be announced later.
This marks Bajaj Auto’s second share buyback in consecutive years, following a Rs 2,500 crore buyback in July 2022 at Rs 4,600 per unit. Managing Director Rajiv Bajaj anticipates a more substantial buyback this time, projecting a cash balance of Rs 20,000 crore by the end of the financial year 2024. Bajaj Auto reported a prosperous 2023, closing the year as the second-best performer on the index, trailing only Tata Motors.
On January 8, the Bajaj Auto stock closed at Rs 6,980, demonstrating resilience compared to the benchmark Nifty50, which experienced a 1 percent decline. Since the announcement of the buyback, the stock has gained nearly 5 percent, contributing to a remarkable 93 percent surge in the past year.
