Bajaj Auto’s Stock had a superb run today touching a high of Rs. 7399 today, following the announcement by the popular motorcycle manufacturer, for a share buyback plan amounting to Rs 4,000 crore.
The Auto Major plans to repurchase shares at a premium of 43 per cent, setting the buyback price at Rs 10,000 per share, a sizeable increase from the previous day’s closing price of Rs 6,983.85.
The market responded positively to the unexpected premium, propelling shares of the company to surge by as much as 5.9 per cent, reaching Rs 7,399 before settling with a 1.5 per cent gain at around 12:30 pm. Today’s rally marks the ninth consecutive week of gains for Bajaj Auto, reflecting its longest weekly winning streak since January 2021.
The outlook for Bajaj Auto’s stock price after the share buyback plan appears to be positive.
Here are some key points to consider:
- Immediate positive reaction: Bajaj Auto’s stock reacted positively to the share buyback plan, with a 5.9% surge on the day of the announcement, reaching Rs 7,399 before settling with a 1.5% gain.
- Premium buyback price: The buyback price of Rs 10,000 per share is a 43% premium over the previous day’s closing price of Rs 6,983.85.
- Retail and institutional acceptance: Analysts expect the general category (institutional) acceptance ratio to be around 1.3%, while for retail investors, the initial calculations suggest acceptance in the range of 4% to 10% .
- Stock performance: Since the buyback announcement, Bajaj Auto’s stock has witnessed a nearly 5% gain, with the stock reaching a high of Rs 7,420.
- Company outlook: Bajaj Auto‘s Managing Director Rajiv Bajaj anticipates the buyback to be substantial, projecting a cash balance of Rs 20,000 crore by the end of the fiscal year 2024.
- Previous buyback experience: Bajaj Auto had previously conducted a share buyback worth Rs 2,500 crore in June 2022 at a price of Rs 4,600 per unit.
Considering these factors, the outlook for Bajaj Auto’s stock price after the share buyback plan appears to be positive, with a potential for further growth as the buyback plan is implemented and the company’s financial position strengthens.
