Bajaj Auto’s Stock Soars 5% Further

Bajaj Auto's Stock

On January 9, Bajaj Auto’s stock price increased by 5% following the announcement of an alluring Rs 10,000 share buyback price. Although the buyback price appears appealing, Nuvama calculations indicate that the limited size of the buyback offer will limit the acceptance ratio to less than 10%, meaning that most retail shareholders may not be able to benefit from this windfall.

At the beginning on January 9, the stock trade was up 5% due to the announcement of the share buyback.
Furthermore, brokerage company UBS has issued a “sell” call on Bajaj Auto stock due to the stock’s surge since the repurchase announcement, with the expectation that the promoters will receive the majority of the buyback.

A share repurchase worth Rs 4,000 crore, or a premium of 43% over the previous closing price, was agreed by the Bajaj Auto board on January 8. Using the tender process, Bajaj Auto plans to purchase 40 lakh shares, or 1.41 percent of all outstanding shares.

The acceptance possibilities were presented by Nuvama Alternative and Quantitative Research analyst Abhilash Pagaria. At the current market price of Rs 6,983, the institutional acceptance is projected to be about 1.3 percent, with a potential yield of 55-60 basis points. Based on preliminary calculations, the acceptance percentage for retail stockholders might be between 4 and 10 percent.

Promoters of Bajaj Auto will take part in the buyback as well. Public shareholders own 45.06 percent of the corporation, with the promoters owning 54.94 percent of it. According to Nuvama’s Pagaria, the general (institutional) acceptance estimate might have dropped to roughly 3 percent if the promoters had chosen to opt out, which is improbable.

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