Bajaj Auto Ltd's board has unveiled a share buyback plan amounting to Rs 4,000 crore at a price of Rs 10,000 per share via the tender offer route on a proportionate basis. On Monday, Bajaj Auto shares concluded at Rs 6,985.70, indicating a 43.14% premium over the proposed buyback price.
In a filing to BSE, the company disclosed that its board greenlighted the buyback of up to 4,000,000 fully paid-up equity shares, representing 1.41% of the total equity shares, at Rs 10,000 per share, for a total consideration not exceeding Rs 4,000 crore.
Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research, anticipates a positive response in the immediate term for Bajaj Auto stock. He estimates institutional acceptance around 1.3%, with a potential yield of 55-60 basis points. For retail investors, initial calculations suggest acceptance ranging from 4% to 10%. If promoters opt out, general acceptance might rise to 3%, while retail acceptance remains constant.
Although specific buyback dates are pending, Nuvama Alternative Research forecasts completion within 3-3.5 months. The buyback represents 16.33% of the total paid-up equity share capital and 14.49% of free reserves, as per audited financial statements for the fiscal year ending March 31, 2023.
Currently, 64 promoter and promoter group shareholders hold 54.94% stake in Bajaj Auto. Foreign Portfolio Investors (FPI) own 14.72%, while mutual funds (5.35%) and insurance companies (3.21%) also have substantial stakes.
The buyback is subject to shareholder approval via a special resolution through a postal ballot. Further details, including the process and timelines, will be released in accordance with Buyback Regulations.
