Bajaj Auto stock jumps nearly 6%, hits fresh record high as board approves ₹4,000-crore share buyback
Bajaj Auto's shares surged by nearly 6% in early trading session after the company's board approved a ₹4,000-crore share buyback at a price of ₹10,000 apiece.
In today's early trading session, Bajaj Auto, a prominent two-wheeler manufacturer and the flagship company of the Bajaj Group, witnessed a 5.94% spike in its shares, hitting a fresh record high of ₹7,399 apiece. This surge followed the approval by the company's board on January 08 for a ₹4,000-crore share buyback at a price of ₹10,000 per share, representing a substantial 43.20% premium compared to the stock's closing price of ₹6,983.85 per share on Monday.
Today's significant surge in shares has propelled the company's market capitalisation above ₹2 lakh crore for the first time. Considering the stock's all-time high price today at ₹7,399 per share, the market capitalisation reached ₹2,09,317 crore.
The Buyback Plan
The board also made it clear that Bajaj Auto's share buyback won't exceed ₹4,000 crore. The buyback will include the promoters and promoter group of the company. The maximum number of equity shares proposed to be repurchased would be 40,00,000 ("proposed buyback shares"), comprising approximately 1.41% of the company's paid-up share capital.
As of January 05, 2023, the promoters and promoter group collectively hold a 54.94% stake in the company. General public shareholders own a 21.18% stake, while foreign institutional investors and domestic institutional investors each own a 15.41% and 8.46% stake, respectively.
With the company's market capitalisation of ₹1,97,768 crore as of January 08, this buyback size accounts for 2.02% of the company's total market capitalisation. Notably, the buyback is conducted through the tender offer route.
Analysts suggest that retail investors may face limited opportunities to participate in the buyback, given the involvement of the promoters' group in the plan. The company last initiated a similar move in 2022, when shareholders approved the buyback of up to 54,34,782 equity shares at a price of ₹4,600 each. Before that, the company engaged in a buyback in 2000.
"The buyback is subject to the approval of the shareholders by means of a special resolution through a postal ballot. The public announcement and letter of offer setting out the process, timelines, and other requisite details will be released in due course in accordance with the buyback regulations," the company said in an exchange filing.
At 9:45 AM, the stock was trading with a gain of 2.25% at ₹7,140 apiece.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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