MUMBAI: Engineering and construction giant Larsen and Toubro (L&T) proposed to buy back shares worth up to Rs 10,000 crore via tender offer route. The company’s board on Tuesday approved the proposal to buy back 3.33 crore shares, representing 2.4% of the total paid-up equity share capital, at a maximum price of Rs 3,000 apiece.
The buyback price represents a premium of nearly 17% to the July 25 closing price of Rs 2,562. The proposal to buy back shares is subject to the approval of shareholders, the company said in a statement. This is company’s second attempt to buy back shares as its board had approved a proposal to buy back shares worth Rs9000 crore in 2018. The company did not proceed with its plan after the Securities and Exchange Board of India did not give a green signal, citing compliance issues over its post-buyback debt-equity ratio.
Under a share buyback, the company buys back its own shares from shareholders and it is seen as a tax-efficient way to give cash back to investors. Share buyback reduces the number of shares available in the market and thereby increases the real value of the stock. “The Board of Directors has approved a proposal to buy-back through the tender offer route equity shares of the Company for an aggregate amount not exceeding Rs 10,000 crore (excluding tax on buy-back),” said the company in a statement.
“The public announcement and the letter of offer setting out the process, timelines and other requisite details of the Buyback will be released in due course in accordance with the Buyback Regulations,” said the company in a regulatory filing to the Bombay Stock Exchange. The specific price at which the buyback will be made may be determined by the Board or Committee, at an appropriate time, the company said. The shares of the company closed 1.7% lower at Rs 2562 apiece on the BSE on Tuesday.
The Board has also approved a special dividend of Rs 6 per share. The record date for the same is fixed on August 2 and it will be paid on or before August 14. For the first quarter, the company’s net profit rose 46% year-on-year to Rs 2,493 crore, while revenues increased 34%to Rs 47,882 crore.
It received orders worth Rs 65,520 crore at the group level during the June quarter, registering a strong year-on-year growth of 57%. The consolidated order book of the group is at Rs 4.12 lakh crore as of June, with international orders having a share of 29%.
