The board of directors at Bajaj Auto Ltd, a prominent player in the two and three-wheeler industry, has given the green light on January 8th for a significant Rs 4,000 crore share buyback program at a price of Rs 10,000 per share. This price represents a substantial premium of 43 percent over the most recent closing stock price.
This is at a premium of 43 percent to the last closing price.
As part of this buyback initiative, the company intends to acquire 40 lakh shares through a tender route, equivalent to 1.41 percent of Bajaj Auto’s outstanding shares. Additionally, the company’s promoters are set to participate in this buyback, with their current ownership standing at 54.94 percent.
The automaker has formed a dedicated Buyback Committee and has granted them the authority to undertake any necessary actions, transactions, or decisions related to the buyback at their discretion.
It’s important to note that the success of this buyback is contingent on the approval of shareholders through a special resolution via a postal ballot. Further information regarding the record dates and other pertinent details will be disclosed at a later time.
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This is at a premium of 43 percent to the last closing price.
This marks Bajaj Auto’s second share buyback in as many years, following its previous buyback in July 2022, where it acquired shares worth Rs 2,500 crore at a unit price of Rs 4,600. Bajaj Auto’s Managing Director, Rajiv Bajaj, recently mentioned that this buyback will be considerably larger in scale.
Mr. Rajiv Bajaj also noted that Bajaj Auto is poised to conclude the 2024 fiscal year with a substantial cash reserve of Rs 20,000 crore, highlighting the company’s excellent performance in 2023.
On January 8th, Bajaj Auto’s stock concluded the day at Rs 6,980, remaining relatively stable compared to the previous close. Notably, it outperformed the benchmark Nifty 50 index, which experienced a 1 percent decline. Since the announcement of the buyback, the stock has seen a nearly 5 percent increase and has witnessed remarkable growth of over 93 percent in the past year, positioning it as the second-best performer on the index, trailing only behind Tata Motors.
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