What should investors do with Bajaj Auto Buyback? Anil Singhvi suggests this

The Board of Directors of Bajaj Auto has approved the proposal for buyback of the fully paid up equity shares of the Company, the comany said in its filing to the exchanges. The board meeting was held on Monday, 27 June.

The two-wheeler major will buy equity shares from the open market through stock exchange mechanism at a price of up to Rs 4600 per equity share, the exchange filing said.

The total buyback offer is worth Rs Rs 2500 crore and represents 9.61 per cent and 8.71 per cent of the aggregate of the total paid-up share capital and free reserves.

Subject to the market price of the Equity Shares being equal to or less than the Maximum Buyback Price, the indicative maximum numbei of Equity. 

The company plans to buy 54,34,782 equity shares comprising approximately 1.88 per cent of the paid-up share capital of the Company as of 27 June 2022. 

"If the Equity Shares are bought back a price below the Maximum Buyback Price, the actual number of Equity Shares to be bought back could exceed the Proposed Buyback Shares, but will always be subject to the Maximum Buyback Size," the exchange filing said. 

Commenting on Bajaj Auto's buyback offer, Zee Business Managing Editor Anil Singhvi said that the buyback price is okay. Market Guru said that it was an open offer and not a tender offer where the investors could enefit from the arbitrage. 

He said that the company intends to buy nearly 2 per cent (1.88) per cent equity shares from the markets in six months time. He said that the buyback does not hold enough value. The Market Guru said that investors must buy this stock only if it trades at levels below Rs 3806. He advised is not to buy at this buyback price. Singhvi said that the value hs been locked around the current prices both in cash and futures so no major upside or downside is expected.

His advice to investors is to book profits in all two wheeler stocks be it Eicher, Hero Motocorp or TVS. 

He said that the investors have bettwe options in TVS Motor Company 

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"Bajaj Auto announces OPEN MARKET Buyback" from Ashwin Patil, Senior Research Analyst at LKP Securities

"The size of the buyback is Rs 2500 cr and at a price of Rs 4600. However it's an open market buyback and not through a tender offer. This means that the stock may not reach those levels by the time the buyback offer closes. Therefore for retail investors, there may not be any significant upside because of this buyback. However, we believe that the stock definitely holds a good value through its intrinsic performance and can reach levels of Rs 4400 which is as it is our target price. Maintain Buy"