Bajaj Auto, a stalwart in the automotive industry, is gearing up for a potential share buyback, triggering a significant surge in its stock price, which soared over 5 percent, breaching the Rs 7,000 mark for the first time in its history. The company’s board will convene on Monday, January 8, to deliberate upon the prospect of repurchasing fully paid-up equity shares.
Following the announcement of the impending board meeting, Bajaj Auto’s shares rallied to an all-time high of Rs 7,059.75 on the Bombay Stock Exchange (BSE). The day concluded with the stock settling at Rs 6,958.60, marking a remarkable surge of 4.44 percent.
In an official statement, Bajaj Auto stated, “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 fully paid-up equity shares of the company.”
Rajiv Bajaj, the CEO of Bajaj Auto, conversing with CNBC-TV18, hinted at the forthcoming board meeting, emphasizing the company’s intention to potentially execute a more substantial buyback this time. “We will close with ₹20,000 crore of cash this year. Whenever cash on books crosses ₹15,000 crore, we are looking to give back over 70% to investors,” Bajaj affirmed.
Previously, in June 2022, Bajaj Auto had executed a share buyback valued at ₹2,500 crore through an open-market stock exchange mechanism, priced at ₹4,600 per share. This time, the management hints at a larger buyback in comparison to the previous instance, given the higher cash reserves.
Rajiv Bajaj further elaborated on the company’s financial prowess, highlighting a successful 2023 and the projection of ending the fiscal year 2024 with ₹20,000 crore in cash reserves.
The surge in Bajaj Auto’s shares to an unprecedented level comes as a testament to its robust performance, with shares having surged by an impressive 88% throughout 2023. Notably, the company’s shares were among the top performers on the Nifty 50 index in the preceding year.
The market is closely observing the upcoming board meeting, anticipating the outcome and potential impact on shareholders as Bajaj Auto considers this strategic move to return capital to its investors.