Bajaj Auto board approves Rs 4,000 cr share buyback at Rs 10,000 apiece

The company will be buying 4 million shares via the tender route, representing 1.41 per cent of Bajaj Auto's outstanding shares

The board of two- and three-wheeler major Bajaj Auto on Monday approved a Rs 4,000 crore share buyback at Rs 10,000 apiece, which is at a premium of 43 per cent to Monday's closing price.
 

The company will buy 4 million shares via the tender route, representing 1.41 per cent of Bajaj Auto's outstanding shares. Company promoters, who currently hold 54.94 per cent, will also participate in the buyback. 
 

"We wish to inform that the board of directors of the company at its meeting held today, ie, Monday, 8 January, 2024, has approved the proposal for buyback of up to 4,000,000 fully paid-up equity shares of face value of Rs 10 each by the company (representing 1.41 per cent of the total number of equity shares of the company) at a price of Rs 10,000 per equity share payable in cash for a total consideration not exceeding Rs 4,000 crore," said Bajaj Auto in a regulatory filing.
 

On Monday, Bajaj Auto's stock ended the day at Rs 6,985.7 apiece on the BSE, up 0.25 per cent.

 

The company had purchased shares worth Rs 2,500 crore in July 2022 at Rs 4,600 apiece. Bajaj Auto Managing Director Rajiv Bajaj had told CNBC TV18 last week that the buyback would be far bigger this time.
 

The company generated over Rs 3,600 crore of free cash flow in the first half of the financial year 2023-24 (H1FY24), which is 1.6-times higher than H1FY23. It now holds Rs 17,326 crore of surplus funds on its balance sheet as on September 30, 2023, after dividend distribution of Rs 4,000 crore during the quarter. Bajaj Auto's net worth as of September 30, 2023 stood at Rs 29,331 crore.  As at the end of March 2023, the auto major's equity capital plus free reserves (retained earnings and general reserve) was Rs 24,494 crore.
 

The Rs 4,000-crore share buyback represents 16.33 per cent and 14.49 per cent of the total paid-up equity share capital and free reserves (including securities premium account) according to the audited standalone financial statements and audited consolidated financial statements for the financial year ended March 31, 2023, Bajaj Auto said.
 

The company's stock has had a stellar 2023, surging around 90 per cent. The company will report its third-quarter results on January 24. The auto major’s board has constituted a buyback committee for this purpose.
 

The buyback is subject to approval of the shareholders by means of a special resolution through a postal ballot. The record dates and other details will be announced later.

REVVING UP...

• Bajaj Auto reported over Rs 3,600 crore of free cash flow in H1FY24
• The firm had purchased shares worth Rs 2,500 crore in July ’22 at Rs 4,600 apiece
• The company’s stock has had a stellar 2023, surging around 90%