Bajaj Auto announces ₹2,500 crore share buyback. Key details to know

Homegrown motorcycles and three-wheeler manufacturer’s board on Monday have approved share buyback of up to 2,500 crore at a price not exceeding 4,600 per share, via open market. Bajaj Auto shares were trading 0.7% higher at 3,840 apiece on the BSE in Monday’s afternoon deals.

The auto major’s board earlier this month had deferred a decision on its proposed share buyback, and later decided to meet on Monday, June 27, 2022 to further deliberate on the proposal for buyback of fully paid-up equity shares of the company.

“We wish to inform you that the board of directors of the company (Board) at its meeting held today has approved the proposal for buyback of the fully paid up equity shares of the company having a face value of 10/- each from the existing shareholders of the company from open market through stock exchange mechanism at a price not exceeding 4,600/- per equity share and such aggregate amount, up to 2,500 crore, representing 9.61 % and 8.71% of the aggregate of the total paid-up share capital and free reserves of the company,” Bajaj Auto informed in an exchange filing today.

The company added that indicative maximum number of shares proposed to be bought back, would be 54,34,782 equity shares (proposed buyback shares), comprising approximately 1.88% of the paid-up share capital of the company as of 27 June 2022.

“The Company will utilise at least 50% of the amount earmarked as the Maximum Buyback Size for the Buyback i.e. Rs. 1,250 Crores (“Minimum Buyback Size”). Based on the Minimum Buyback Size and Maximum Buyback Price, the Company would purchase a minimum of27,17,392 Equity Shares,” it added. A share buyback is a process when a company buys its own outstanding shares to reduce the number of shares available in the open market.

Further, since the buyback is from the open market, the details of the actual number of equity shares that would be bought back (including as a percentage of the existing paid-up capital) and the post Buyback shareholding pattern cannot be ascertained at this stage. The company said that the same will be provided upon completion of the share buyback.

The buyback comes as Bajaj Auto is set to face stiff competition from bigger rivals such as Hero MotoCorp in the switch to cleaner vehicles. Bajaj Auto earlier this month rolled out its first electric scooter from its new plant with a production capacity of 500,000 units annually, while Hero MotoCorp – the world’s top two-wheeler maker — is planning to launch its first electric model on 1 July.

Bajaj Auto’s wholly-owned unit Chetak Technology and its vendor partners are planning to invest nearly 7.5 billion in the new EV manufacturing facility. It has sold 14,000 Chetak electric scooters and received 16,000 bookings.

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