Bajaj Auto on June 27 informed stock exchanges that the company has approved the buyback of shares worth up to Rs 2,500 crore. The two-wheeler major intends to buy back 54.35 lakh shares aggregating up to 1.88 percent of the paid-up share capital via the open market at Rs 4,600 apiece.
The buyback price is a steep 20.64 percent premium to Friday’s closing price of Rs 3,812.80. After more than two decades, the company has announced plans to buy back shares. So far this year, the stock has risen 19 percent.
As of September 2021, surplus cash and cash equivalents stood at Rs17,526 crore against Rs 17,689 crore as of March 31, 2021.
Earlier, the company had postponed the buyback plan. The board of directors of the company, at its meeting held on June 14 decided that "further deliberations are required in order to take a decision on the proposal of buyback, and accordingly deferred the matter."
Share buybacks, according to analysts, typically improve earnings per share of a company and return surplus cash to shareholders while also supporting the stock price during sluggish market conditions.
At the time of writing this report, shares of Bajaj Auto were trading 0.64 percent higher at Rs 3,837.35 apiece on the BSE.