Bajaj Auto Shares Rise Ahead of Record Date for ₹5,633 Crore Buyback

Bajaj Auto shares climbed 2% to reach ₹10,268 on the BSE as investors reacted to the upcoming record date for the company's largest-ever share buyback. This massive capital return program marks a significant milestone for the two-wheeler and three-wheeler major.

Details of the ₹5,633 Crore Buyback Programme

Bajaj Auto is set to execute its biggest buyback to date, valued at a maximum of ₹5,633 crore. The company's board previously approved the repurchase of up to 46.94 lakh shares, which represents 1.68% of its total paid-up equity capital.

The buyback will be conducted through the tender route at a price of ₹12,000 per share. This price offers a substantial premium of over 19% compared to the stock's previous closing price. This move follows a previous ₹4,000 crore buyback conducted earlier in 2024 at ₹10,000 per share, signaling the company's continued commitment to returning value to its shareholders.

Strategic Benefits for Small Shareholders

One of the most critical aspects of this corporate action is the benefit reserved for retail investors. Under SEBI regulations, 15% of the total buyback size must be reserved for small shareholders—those holding shares with a total value of up to ₹2 lakh.

According to research from Anand Rathi, this reservation translates to approximately 7.04 lakh shares, valued at roughly ₹844.92 crore at the buyback price. Analysts note that the retail category historically enjoys acceptance ratios close to 100%. For example, a small shareholder holding up to 17 shares could potentially see a significant portion of their holding bought back at the premium price of ₹12,000, providing an attractive immediate return on investment.

Expert Advice: Fundamentals Over Buybacks

While the buyback offers a lucrative exit for existing holders, market experts urge caution for new investors. Harshal Dasani, Business Head at INVasset PMS, emphasizes that the buyback should not be the primary driver for purchasing the stock. Instead, prospective buyers should focus on Bajaj Auto’s long-term business prospects, market valuation, and core fundamentals.

For those already in the stock, the decision to participate depends on the acceptance ratio and the current market price (CMP). Even with an estimated acceptance ratio of 55%, investors can still see meaningful returns if the stock price remains stable or appreciates during the process.

Key Takeaways

  • Record-Breaking Scale: Bajaj Auto is conducting its largest buyback ever, worth ₹5,633 crore, at a premium price of ₹12,000 per share.
  • Retail Advantage: 15% of the buyback is reserved for small shareholders (holdings up to ₹2 lakh), a category that typically sees high acceptance ratios.
  • Investment Strategy: While the buyback offers premium returns for existing holders, new investors are advised to prioritize business fundamentals over the immediate impact of the buyback.