L&T's Rs 10,000 cr buyback got more lucrative; final buyback price raised to Rs 3,200 apiece

The number of equity shares proposed to be purchased under the buyback i.e., 3.12 crore, does not exceed 25 percent of the total number of equity shares in the paid-up equity share capital as on March 31, 2023.

Larsen & Toubro announced on September 11 that the company has increased the buyback price from Rs 3,000 per equity share to Rs 3,200 per equity share.

The company’s buyback committee, at its meeting held on September 11, approved the increase in the buyback price by Rs 200 per equity share and the reduction in the maximum number of equity shares proposed to be bought back by it to 3.12 crore (3,12,50,000, precisely) from 3.33 crore, representing 2.22 percent of the total paid-up equity shares of Larsen & Toubro.

The company’s buyback committee, at its meeting held on September 11, approved the increase in the buyback price by Rs 200 per equity share and the reduction in the maximum number of equity shares proposed to be bought back by it to 3.12 crore (3,12,50,000, precisely) from 3.33 crore, representing 2.22 percent of the total paid-up equity shares of Larsen & Toubro.

The number of equity shares proposed to be purchased under the buyback, i.e., 3.12 crore, does not exceed 25 percent of the total number of equity shares in the paid-up equity share capital as of March 31, 2023.

Commenting on the development, R Shankar Raman, Whole-Time Director & CFO, L&T, said: “L&T is focused on enhancing its Return on Equity (RoE). In fact, one of the core objectives of the company’s five-year strategic plan ‘Lakshya 2026’ is to maximize shareholder value through improved RoE.”

“Apart from several other initiatives to achieve this objective, the company had announced a Rs 10,000 crore buyback program of its equity shares from its shareholders. To successfully complete the proposed buyback plan, thereby realizing its RoE objective, and considering the present market sentiments, the company has decided to increase the buyback price to Rs 3,200 per equity share from the earlier announced price of Rs 3,000. The company is confident that the shareholders will take advantage and benefit from the buyback offer.”

The firm’s shareholders approved the buyback via remote e-voting on August 25, 2023. Subsequently, the buyback committee, at its meeting held on August 26, fixed the specific buyback price at Rs 3,000 per equity share.

L&T informed the bourses that the final buyback offer price has been arrived at after considering various factors, including earnings per share, price-earnings ratio, impact on the net worth of the company, the trends in the volume-weighted average prices, and the closing price of the equity shares at the BSE and the NSE, where they are listed, and other financial parameters.

It further informed that the final buyback offer price was finalized by the “Buyback Committee of the Board appointed for this purpose based on a premium over the daily average of the closing price on BSE and NSE in the immediately preceding two weeks and the date of the Buyback Committee meeting held on Monday, September 11, 2023.”

Notably, the buyback price represents a premium of 38.48 percent and 38 percent to the volume-weighted average market price of the Equity Share on BSE and on NSE, respectively, during the three months preceding July 20, 2023, being the date of intimation to the Stock Exchanges of the date of the Board Meeting to consider the proposal of the buyback (intimation date).

It also represents a premium of 28.30 percent over the closing price of the equity share on BSE and NSE as of July 19, 2023 -- a day preceding the intimation date.

Additionally, it represents a premium of 16.57 percent over the daily average of the closing market price of the equity shares on BSE and NSE in the immediately preceding two weeks prior to the date of the buyback committee meeting.

A premium of 10.57 percent is represented over the closing market price of the equity shares on BSE and NSE on the date of the buyback committee meeting.