Larsen & Toubro Ltd. on July 25 that it would buyback shares worth Rs 10,000 crore, a first in its history. The company will be buying back 3.13 crore shares of face value of Rs 2 each.
The total number of shares that the company will buy back amounts to 2.22% of the total equity.
What is the Offer Price
The maximum price of the share buyback has been set at Rs 3,200, which is at a premium of 1.1% to Wednesday's closing price.
Tender Offer or Open Market?
The buyback will be done through the tender-offer route.
In a tender offer buyback, the company announces a fixed price at which it will buyback shares from existing shareholders. For example, Wipro's buyback was fixed at Rs 445 per share.
L&T's buyback has an upside price cap of Rs 3,200.
What is the Reason for Buyback
The buyback is part of L&T's plan to improve its return on equity as part of the group's 'Lakshya 2026' plan. The buyback is expected to boost L&T's earnings per share and RoE.
When is the Buyback?
The buyback will open on Sept. 18 and will close on Sept. 25
How many shares tendered will get repurchased?
The number of shares that the company will repurchase depends on the acceptance ratio.
According to SEBI rules, 15% of the total tender offer is reserved for the small shareholder category—an investor with an investment of not more than Rs 2 lakh in the company as of the record date. The total public holding in this company is 100%, and the small shareholder category holding stands at 18.52%, or 25.70 crore.
As mentioned above, 15% of the buyback offer of 3.33 crore shares would be reserved for the company's small shareholders, which amounts to 49 lakh shares. Hence, the acceptance ratio for the retail category would be 1.82%.
What is the Record date of L&T's Buyback
L&T has set Sept. 12 as the record date for its Rs 10,000 crore share buyback.
Stock Performance Of L&T
Shares of L&T have risen over 14.13% to Rs 2,906.75 apiece since the buyback announcement.
Thirty-eight out of the 41 analysts tracking L&T maintain a 'buy' rating on the stock, one recommends a 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 1.2%.
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