Bajaj Auto has kicked off its share buyback plan to raise up to ₹4,000 crore, starting on March 6 and closing on March 13. In this buyback, Bajaj Auto aims to repurchase 40 lakh equity shares, which make up 1.41% of the total outstanding shares. The buyback price is set at ₹10,000 per share, a significant 19% higher than its Tuesday closing price of ₹8,351.80 per share.
Now, the big question is: should you, as a stock market investor, tender your shares in the Bajaj Auto buyback? Let’s see what analysts have to say.
According to experts, the buyback price of ₹10,000 is quite attractive, making it a good option for short-term investors looking for quick gains. However, for long-term investors, holding onto their Bajaj Auto shares is advised.
Ashwin Patil, a Senior Research Analyst at LKP Securities, sees Bajaj Auto as a top pick in the auto sector, citing positive factors like the premiumization theme, increasing sales of the Chetak Electric Scooter, and growing exports. Patil suggests that long-term investors should hold onto their Bajaj Auto shares due to the company’s strong fundamentals and growth potential.
Atul Parakh, CEO of Bigul, notes that the buyback at a 24% premium provides an attractive exit for investors wanting to sell. However, he also emphasizes that long-term investors bullish on the company’s prospects should consider holding, given Bajaj’s strong brand, market position, financials, and growth initiatives.
Avinash Gorakshakar, Head Research of Profitmart Securities, suggests that investors who bought Bajaj Auto shares a few months back with a short-term view can consider tendering their shares in the buyback, as the price of ₹10,000 per share is attractive.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd., believes that tendering shares could be a smart move for those uncertain about Bajaj Auto’s future prospects and content with locking in a profit. However, if you’re optimistic about the long-term growth of Bajaj Auto, holding onto your shares might be a better choice.
As for the Bajaj Auto buyback process, it will remain open until March 13, with the verification of tender forms expected to be completed by March 18. The settled bids on the stock exchanges will be finalized by March 20, and any repurchased Bajaj Auto shares will be extinguished by March 26.
The buyback is on a proportionate basis through the “Tender Offer” route, with retail investors having a share entitlement ratio of seven equity shares for every 27 equity shares held. For general category investors, the buyback entitlement is set at 1 share for every 82 shares held.
Bajaj Auto’s promoters and promoter group have expressed their intention to participate in the share buyback, potentially tendering up to an aggregate maximum of 18,75,657 equity shares, given that they currently hold 54.94% of the total equity share capital of the company.
As of 12:10 pm, Bajaj Auto shares were trading 1.31% higher at ₹8,461.20 apiece on the BSE.
