Auto Ltd on Monday said its board has approved a share buyback programme for an aggregate amount of up to Rs 2,500 crore.
The board of directors of the company, at its meeting held on Monday, approved the proposal for buyback of the fully paid up equity shares of the company with a face value of Rs 10 each from existing shareholders, except promoters and promoter group, from open market on the stock exchanges, Bajaj Auto said in a regulatory filing.
The buyback will be carried out at a price not exceeding Rs 4,600 per equity share and for an aggregate amount of up to Rs 2,500 crore, representing 9.61 per cent of the aggregate of the total paid-up share capital of the company, it added.
Ashwin Patil, Senior Research Analyst at LKP Securities said, "The size of the buyback is Rs 2500 cr and at a price of Rs 4600. However it's an open market buyback and not through a tender offer. This means that the stock may not reach those levels by the time the buyback offer closes. Therefore for retail investors, there may not be any significant upside because of this buyback. However, we believe that the stock definitely holds a good value through its intrinsic performance and can reach levels of Rs 4400 which is as it is our target price. Maintain Buy"
On June 14, the company's board had deferred a decision on its proposed share buyback citing further deliberations were required on the proposal.
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