“The board of directors of the Company at its meeting held today has approved a proposal to buyback up to 60 million equity shares of the Company being 4.29% of the total paid up equity share capital, at a maximum price of Rs 1,500 per share for an aggregate amount of Rs 90 billion,” L&T said in a statement.
The buyback is proposed to be made from the shareholders of the Company on a proportionate basis under the tender offer route, it added.
The Buyback is subject to approval of the members by means of a special resolution through a postal ballot. The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the Buyback Regulations, L&T said.
In past three trading sessions, the stock of L&T has outperformed the market by gaining 9% after engineering conglomerate on Saturday said its board would consider a proposal for buyback of equity shares on Thursday, August 23, 2018. On comparison, the S&P BSE Sensex was up 1% during the same period.
“In our view, Larsen is looking at a buyback given no large capex plans over next few years, apart from Hyderabad Metro, asset divestments adding to cash balances with the most recent being the Road INVIT in May’18 and E&A segment for Rs 140 billion, low yield on cash which is ROE dilutive and tight control over NWC and resultant improved cash generation,” Motilal Oswal Securities said in a note.
“L&T remains our top pick in the sector – we believe it is an attractive play on a recovery in industrial and infrastructure capex in India. We maintain Buy with an SOTP-based TP of Rs 1,560 (E&C business at 21x FY20E EPS, higher-end of 5-year trading band to which we add Rs 550 for subsidiaries), it added.
At 11:49 am; L&T was trading 1.8% higher at Rs 1,346, as compared to 0.06% rise in the benchmark index. A combined 2.86 million equity shares changed hands on the counter on the BSE and NSE so far.