NEW DELHI: Shares of Bajaj Auto hit the Rs 7,000 level for the first time on Wednesday and the two-wheeler and three-wheeler manufacturers’ market capitalisation breached the Rs 2 lakh crore milestone during the intraday session after the company said it will consider the proposal for share buyback on January 8.
Bajaj Auto shares on Wednesday hit an all-time high at Rs 7,059.75 on the BSE. The shares closed at Rs 6,989.40, up 5%. At closing, the company’s m-cap stood at Rs 1.98 lakh crore. If the consideration is passed by the board, it will be the second instance in recent times when Bajaj Auto will be launching a buyback scheme. Bajaj Auto had previously announced a share buyback worth Rs 2,500 crore in June 2022 at a price of `4,600 per share.
“We wish to inform you that the board of directors of the company at its meeting scheduled to be held on Monday, 08 January 2024 (“Board Meeting”), inter alia will consider a proposal to buyback of fully paid-up equity shares of the company,” Bajaj Auto said in an exchange filing.
Bajaj Auto CEO Rajiv Bajaj in an interview hinted that the upcoming buyback will be larger in size given higher cash on books. “We will close this year with Rs 20,000 crore cash. Whenever cash on books crosses Rs 15,000 crore, we look to give back over 70% to investors,” said Bajaj.
The company’s shares have been in high demand for the past one year on account of improving domestic and global market prospects. The shares surged 88% in 2023, becoming the second-best performer, only after Tata Motors, on the Nifty 50 index.
Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities said that assuming a bigger buyback size compared to the previous instance, at the current price Rs 6,950, we can expect a price Rs 7,800/ 8,000 range buyback. “Investors should wait and watch for exchange mechanism if it goes via open market then it will not be interested and it management does it via fix price mechanism, market would reward Bajaj Auto in long term,” said Mehta.