Bajaj Auto announces Rs 4,000 crore share buyback; price fixed at Rs 10,000 each

Bajaj Auto, a flagship company of the Bajaj Group and a manufacturer of two and three-wheelers, announced after the market closed that the company’s board of directors has approved a proposal for a Rs 4,000 crore buyback at its meeting held on Monday.

Buyback details

According to the details in the press release, at its meeting held on Monday, January 8, 2024, the Company’s Board of Directors approved a proposal for the buyback of up to 4,000,000 fully paid-up Equity Shares with a face value of Rs 10 each. This buyback represents 1.41% of the total number of equity shares of the company and will occur at Rs 10,000 per equity share, payable in cash. The total consideration for this buyback will not exceed Rs 4,000 crore. The buyback price of Rs 10,000 per share which represents an impressive premium of 43% compared to Monday’s closing price.

The share buyback represents 16.33% and 14.49% of the total paid-up equity share capital and free reserves (including securities premium account) as per the audited standalone financial statements and audited consolidated financial statements of the company for the financial year ended on March 31, 2023.

Furthermore, the board or buyback committee may, until one working day before the record date, increase the buyback price and decrease the number of equity shares proposed to be repurchased, ensuring no change in the buyback size. The buyback is subject to approval by the shareholders through a postal ballot using a special resolution.

Share Performance 

In Tuesday’s trading session, the company’s shares opened higher following the news of a buyback at Rs 7,420 per share on the BSE. As of the time of writing the article, stocks are trading at Rs 7,152 per share, which is 2.4% higher than the previous day’s closing price of Rs 6,985.70 on the BSE. The current market capitalisation of the company stands at Rs 2,02,550 crore.

Additionally, the company’s stocks have delivered an impressive return to their shareholders, increasing by around 100% in the past year and 43% in the past three months.

Financial Overview:

In the second quarter of FY24, the company reported revenues of Rs 10,838 crore, reflecting a growth of 6.20% YoY compared to the same quarter in the previous year, when the revenue stood at Rs 10,203 crore. The company posted an operating profit of Rs 2,130 crore for the quarter, in contrast to an operating profit of Rs 1,750 crore in the corresponding quarter of the previous year. Furthermore, the company reported a net profit of Rs 2,020 crore, compared to a net profit of Rs 1,719 crore in the same period last year.

The company’s ROCE and ROE are 26.2% and 20.2%, respectively, while stocks are trading at a PE of 29.4 times in the market. In terms of ownership, the Promoter holds 54.95%. The FIIs and DIIs hold 14.64% and 8.66% respectively, while the remaining 21.67% is held by public investors, according to the most recent update.

Company Overview: 

Bajaj Auto, the flagship company of the Bajaj Group, is a manufacturer of two-wheelers and three-wheelers. It exports its products to 79 countries across various regions including Latin America, Southeast Asia, etc. The company is headquartered in Pune, India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.