Bajaj Auto buyback opens: Bajaj Auto shares were on investors’ radar Wednesday as the two- and three-wheeler manufacturer’s share buyback program opened today. Bajaj Auto shares gained nearly 2% to ₹8,515.55 apiece on the BSE.
Bajaj Auto share buyback for raising up to ₹4,000 crore opened today, March 6, and will close on March 13. As per the share buyback scheme, Bajaj Auto will repurchase 40 lakh equity shares, amounting to 1.41% of total outstanding shares, through the tender route.
Bajaj Auto buyback price is set at ₹10,000 per share, which is more than 19% higher than its Tuesday’s closing price of ₹8,351.80 apiece.
However, should stock market investors tender their shares in Bajaj Auto buyback? Let us check what analysts have to say.
Should you tender shares in Bajaj Auto buyback?
Analysts believe Bajaj Auto share buyback price of ₹10,000 is very attractive and short-term investors can tender their shares in the buyback program. However, analysts have suggested long-term investors to hold Bajaj Auto shares.
“Bajaj Auto is my top pick in the auto sector. Only short-term investors looking for quick gains can tender their shares in the buyback. However, long-term investors should hold Bajaj Auto shares given the company’s strong prospects,” said Ashwin Patil, Senior Research Analyst at LKP Securities.
Patil believes the premiumization theme, rising sales of Chetak Electric Scooter and improving exports are key positives for Bajaj Auto that will drive the share price going ahead.
Therefore, according to him, long-term investors should hold Bajaj Auto shares and not tender them in the share buyback due to the company’s strong fundamentals and growth outlook.
Atul Parakh, CEO of Bigul also noted that Bajaj Auto’s buyback of 2.33% equity at a 24% premium provides an attractive exit opportunity for investors looking to sell.
“However, long-term investors who are bullish on the company’s prospects should consider holding, given Bajaj’s strong brand, market position, financials, and growth initiatives. While positives like new launches and expansions support the outlook, near-term headwinds from input costs, competition, and macros exist,” Parakh said.
Overall, he believes Bajaj Auto remains a well-managed two-wheeler player with robust fundamentals.
Coining similar views, Avinash Gorakshakar, Head Research of Profitmart Securities said investors who purchased Bajaj Auto shares a few months back and with a short-term view can tender their shares in the buyback.
“The buyback price of ₹10,000 per share is very attractive and investors are getting a good deal at this price,” Gorakshakar said.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd. believes tendering your shares could be a smart move if you’re doubtful about Bajaj Auto’s future prospects and would be content to lock in a profit.
“Rather than selling at a premium today, if you’re enthusiastic on Bajaj Auto’s long-term prospects, you could prefer to hang onto your shares and possibly profit from future growth. The choice to tender your shares ultimately comes down to your personal investing objectives and risk tolerance,” said Gour.
About Bajaj Auto Buyback
Bajaj Auto share buyback will remain open till March 13. The verification of tender forms by the registrar will be completed by March 18, and bids will be settled on the bourses by March 20. Bajaj Auto shares that are repurchased will be extinguished by March 26.
The board of directors of Bajaj Auto had fixed February 29 as the record date for Bajaj Auto buyback. The share buyback is on a proportionate basis through the “Tender Offer” route.
The company’s board had approved to buyback up to 40,00,000 fully paid-up equity shares having a face value of ₹10 each at ₹10,000 per equity share for an aggregate amount not exceeding ₹4,000 crore.
This amount works out to 16.33% and 14.49% of the total issued and fully paid-up equity share capital and free reserves, respectively, and represents approximately 1.41% of the total issued and paid-up equity share capital of the company, as of March 31, 2023.
For retail investors, comprising individual shareholders with investments up to ₹2 lakh, the share entitlement ratio is established at seven equity shares for every 27 equity shares held on the record date, translating to a 25.9% acceptance rate.
For the general category, the buyback entitlement is set at 1 share for every 82 shares held on the record date. The final acceptance rate is anticipated to range between 26-30%.
Bajaj Auto’s promoters and promoter group have expressed their intention to participate in this share buyback and may tender up to an aggregate maximum of 18,75,657 equity shares, the company said.
The promoters and promoter group currently hold 54.94% of the total equity share capital of Bajaj Auto.
At 12:10 pm, Bajaj Auto shares were trading 1.31% higher at ₹8,461.20 apiece on the BSE.
