Bajaj Auto announces ₹4,000 crore share buyback at 43.14% premium over the current share price

Bajaj Auto Share Buyback: Bajaj Auto, the renowned manufacturer of two-wheelers and three-wheelers, has set the wheels in motion for a significant ₹4,000 crore share buyback plan. This buyback amounts to 1.41% of the total equity shares of the company and is priced at ₹10,000 per share payable in cash.

Bajaj Auto Share Buyback Announcement

The announcement via a filing to the Bombay Stock Exchange (BSE) sent positive ripples across the stock market. The proposed buyback price, standing at a robust 43.14% premium over the current share price of ₹6,985.70, has attracted attention from various stakeholders.

According to Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research, the initial estimates indicate an institutional acceptance of around 1.3% with potential yields of 55-60 basis points at the current market price. The projected acceptance ranges between 4% to 10% for retail investors, providing an avenue for their participation.

However, Pagaria also notes that if promoters choose not to participate (which seems unlikely), institutional acceptance might rise to 3% while retail acceptance remains steady. The specific dates for the buyback are yet to be announced, but Nuvama Alternative Research forecasts completion within the next 3-3.5 months.

Retail investors must grasp that this buyback represents 16.33% of the total paid-up equity share capital and 14.49% of free reserves, per the audited financial statements for the fiscal year ending March 31, 2023.

Notably, Bajaj Auto's board has established a Buyback Committee, empowering it to undertake all necessary actions related to the buyback. However, it's crucial to remember that the buyback's finalization is contingent on shareholder approval through a special resolution via a postal ballot.

The company has assured the release of a public announcement and a detailed letter of offer outlining the process, timelines, and other pertinent details aligned with the Buyback Regulations. Additionally, Bajaj Auto has the prerogative, until one working day before the record date, to modify the buyback price or the number of equity shares to be repurchased, ensuring no alterations in the buyback size.

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