Mumbai: Construction and engineering company Larsen and Toubro Ltd on Thursday approved a share buyback worth 9,000 crore at 1,500 apiece.

The buyback price is at a 13.5% premium from Tuesday’s closing price of 1,322.

The L&T board approved the buyback of up to 60 million shares, aggregating up to 4.29% of the company’s paid-up equity capital.

Following the announcement, L&T shares ended 2.3% higher on BSE at the end of the day’s trade on Thursday. The benchmark Sensex rose 0.13% to 38,336.76 points. Year to date, L&T has risen 7.6%.

“L&T’s proposal for a share buyback is a natural fallout of limited investment opportunities in EPC (engineering, procurement and construction), its aversion to investment in long-gestation projects, and strong cash-flow generation in its core E&C business," said Kotak Institutional Equities in a 21 August report.

At the end of March, the company had 8,600 crore in cash and cash equivalents. On a consolidated basis, it was at 17,425 crore. “Consistency of dividend payout through the weak past five-year period and a large quantum of current dividend payout ($350 million) strengthen the case for a structured buyback programme for L&T. The current buyback meaningfully supports L&T’s case for achieving 18% RoE (return on equity) by 2020-21," the Kotak report added.

Tata Consultancy Services and HCL Technologies had recently announced buybacks worth 16,000 crore and 40,000 crore, respectively

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