On June 14, Bajaj Auto May Consider a Share Buyback; What Investors Should Know

Bajaj Auto stated in a filing to the stock exchanges on Thursday that it will contemplate a buyback of its fully paid-up equity shares. The board of directors will discuss a proposal to buyback shares during a meeting set for June 14th, according to the business.

“This is to inform you that the Company’s Board of Directors will meet on Tuesday, June 14, 2022, to consider, among other things, a proposal for the buyback of fully paid-up equity shares of the Company in accordance with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018,” the company said in an exchange filing.

“Further, the trading window for dealing in the Company’s securities is closed for the designated persons from 9 June 2022 to 16 June 2022 (both days inclusive), as per the Company’s Code of Conduct framed pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended,” Bajaj Auto added.

A share buyback, also known as a share repurchase, is a corporate activity in which a company buys back its own outstanding shares from existing shareholders, typically at a higher price than the market price. It could be a more tax-effective manner of returning money to shareholders.

Share buybacks reduce the number of shares in circulation, increasing the value of the stock and earnings per share (EPS).

The company’s latest buyback was in 2000, when shareholders approved the purchase of up to 18 million equity shares at Rs 400 each.

Since FY08, Bajaj has paid dividends to shareholders, with the amount increasing year after year, from Rs 20 per share in FY08 to Rs 140 at the end of FY22. During the same time span, the total dividend distribution increased from Rs 289 crore to Rs 4,051 crore at the end of FY22.

In the last year, the company’s stock has dropped 8.2 percent. Year to date, it has risen 19.3 percent. On the BSE, Bajaj Auto shares finished at Rs 3,876.90 on Thursday, up 2.21 percent from Wednesday’s close.

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Q4 Results from Bajaj Auto

For the month of May, Bajaj Auto reported lower-than-expected sales figures. In May, it claimed total sales of 2.75 lakh units. Sales volumes increased by only 1% year over year in the preceding month, and were down more than 34% from pre-pandemic levels in May 2019.

Bajaj Auto
Bajaj Auto

The company’s sales performance was hampered by a bad month for exports. In May, two-wheeler exports declined 15% year on year to 1.53 lakh units, while three-wheeler exports fell 67% to 10,163 units.

Bajaj Auto Ltd recorded a 10% increase in net profit for the March 2022 quarter, to Rs 1,469 crore, up from Rs 1,332 crore in the previous fiscal quarter. The increased profit was mostly attributable to an extraordinary item of Rs 315 crore accrued as an incentive receivable from the Maharashtra government under a plan.

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