Bajaj Auto Shares Rise Ahead of Record Date for ₹5,633 Crore Buyback
Investors are showing keen interest in Bajaj Auto as the company approaches the record date for its largest-ever share buyback programme. The stock rose 2% to ₹10,268 on the BSE, reflecting market optimism surrounding the massive ₹5,633 crore capital allocation.
Details of the Largest-Ever Buyback Programme
Bajaj Auto is set to execute its most significant buyback to date, surpassing its previous ₹4,000 crore repurchase programme conducted earlier in 2024. The company's board has approved the repurchase of up to 46.94 lakh shares, representing 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 offers a significant premium of over 19% compared to the stock's previous closing price. The crucial record date for determining eligible shareholders is June 24 (Wednesday).
Opportunities and Mechanics for Small Shareholders
Under SEBI regulations, a portion of the buyback is specifically reserved for small shareholders—those holding shares worth up to ₹2 lakh. For Bajaj Auto, this reserved category accounts for approximately 15% of the total buyback size, which translates to roughly 7.04 lakh shares worth ₹844.92 crore.
Market analysts highlight that retail shareholders often benefit from higher acceptance ratios in this category. According to Sunny Agrawal, Head of Fundamental Research at SBI Securities, a small shareholder could potentially hold up to 17 shares to remain eligible for this reserved category.
For instance, if an investor tenders 9 shares and the acceptance ratio is 55%, those 9 shares would be bought back at the premium price of ₹12,000. If the market price stays around ₹10,000, the investor could see an overall return of nearly 10.6% on the tendered portion.
Expert Advice: Fundamentals vs. Corporate Actions
While the buyback presents a lucrative exit opportunity for existing holders, experts caution new investors against using the buyback as the sole reason for entry. Harshal Dasani, Business Head at INVasset PMS, emphasizes that investment decisions should be driven by the company's long-term business prospects and valuation rather than temporary corporate actions.
Bajaj Auto has demonstrated strong market performance, with its shares gaining 22% over the past year. As the company continues to lead in the two-wheeler and three-wheeler segments, investors are closely watching whether the buyback will further strengthen its capital structure and shareholder value.
Key Takeaways
- Massive Buyback Scale: Bajaj Auto is repurchasing up to 46.94 lakh shares at ₹12,000 per share, a total value of ₹5,633 crore.
- Retail Advantage: Small shareholders (holding up to ₹2 lakh in stock) have a reserved quota of approximately ₹844.92 crore, which historically sees higher acceptance ratios.
- Strategic Focus: While the 19% premium is attractive for existing holders, new investors are advised to prioritize the company's core business fundamentals and long-term valuation.