Larsen & Toubro Ltd (L&T), a prominent engineering and infrastructure conglomerate, is set to kickstart its equity share buyback program on September 18. The last date for tendering shares or closing of the buyback will take place on September 25.
Larsen & Toubro announced a Rs 10,000 crore share buyback along with its June quarter results in July. The tender offer buyback was supposed to be carried out at a price of Rs 3,000 per share but the company announced on September 11 that it has increased the buyback price to Rs 3,200 per equity share.
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R Shankar Raman, L&T's CFO and whole-time director, emphasized the company's commitment to improving its Return on Equity (RoE). This aligns with the central objective of the five-year strategic plan, 'Lakshya 2026,' which aims to enhance shareholder value through RoE optimization. The buyback of L&T shares is a significant step toward achieving this objective by returning capital to the shareholders.
The engineering major is ‘walking the talk’ on its RoE focus with a buyback price of Rs 3,200 per share, pointed out foreign brokerage firm CLSA.
The EPC major anticipates that the buyback will have minimal effect on its profitability and earnings, except for reducing the funds available for investment, which could have otherwise been used to generate investment income.
Under the buyback regulations, a promoter can choose to participate in a buyback. However, since L&T is professionally managed and lacks identifiable promoters or a promoter group in control, the disclosure of promoter intentions, current holdings as of the Public Announcement date, and trading details for the past 12 months is not relevant, the company said.
The financing for the planned buyback will come from the company's free reserves (retained earnings), current cash and cash equivalents, and/or internal earnings, as well as any other permissible source according to the Buyback Regulations or the Act.
L&T is a professionally managed conglomerate valued at $23 billion. Founded in Mumbai in 1946 by Danish engineers Henning Holck-Larsen and Soren Kristian Toubro, the company operates in sectors including EPC projects, hi-tech manufacturing and services. The company's shares are listed on the BSE since September 24, 1952 and on the NSE since December 14, 2000.
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