Bajaj Auto Share Buyback: Big two-wheeler manufacturing company Bajaj Auto has made a big announcement. The company’s board has approved the buyback of shares. Its value will be around Rs 4,000 crore. In the information given to the stock market, Bajaj Auto said that the board of directors of the company has approved the buyback proposal of 40,00,000 shares of face value of Rs 10. This repurchase will be done at a price of Rs 10,000 per share. Thus, this buyback will be worth Rs 4,000 crore. The buyback is pending shareholder approval. The company is giving 43 percent more premium to the shareholders than the current price. Let us tell you that on Monday, Bajaj Auto shares closed at Rs 6983.85 with a rise of 0.1 percent even in the falling market. Investors have earned 93 percent profit from the company’s shares in the last one year. At the same time, the company’s shares have increased by 4.19 percent in the last five days. Whereas, there has been a jump of 14 percent in one month and 43 percent in 6 months. At present the market cap of the company becomes Rs 1,97,820.88 crore.
The company is doing buyback for the second time
Bajaj Auto is purchasing 1.41 percent of the total number of equity shares of the company. Currently, the company’s promoter and promoter group entities hold 54.94% stake in Bajaj Auto. Whereas, foreign institutional investors hold 14.72% stake. Earlier last week, the company had announced that its board would consider buyback of shares. However, the company is planning to buy back shares for the second time. The share price has almost doubled since the time the company did the buyback. Last time the company had done share buyback through open market. However, this time the company has used the tender offer route to buy shares. The last month of the year 2023 was very good for Bajaj Auto along with the Indian stock market. Bajaj Auto’s total sales in December 2023 increased by 16 percent to 3,26,806 units. At the same time, the company had sold a total of 2,81,514 units in December 2022. Accordingly, sales of two-wheelers increased by 15 percent to 2,83,001 units in December 2023. The company’s domestic two-wheeler sales increased by 26 percent.
What is share buyback?
When a company buys its own shares from shareholders from the open market, it is called share buyback. Companies do this through tender offers and open market offers. The main objective of share buyback is to provide the shareholders the right to buy back their stocks. This could be a kind of investment and an attempt to increase stock prices. During buyback, the company itself goes to the market to buy its stock. This may increase the demand for the stock, which may increase its price. Through this, the company gives its shareholders the right to buy their stocks on the basis of demand. Shareholders can take advantage of this if they decide to sell their stocks. The share buyback provision may be for a specific period of time and may limit the right to purchase stocks. This gives shareholders limited time to buy back their stocks.