Record Date Set for Bajaj Auto's Massive Share Buyback

Bajaj Auto's share price experienced a notable increase of 2.52%, trading at ₹26.49 on the NSE. This surge occurred as the company approached the record date for its substantial ₹5,633 crore share buyback program. The company's board had previously approved the buyback of up to 46.94 lakh equity shares, which constitutes 1.68% of its total paid-up equity capital.

The crucial date for determining shareholder eligibility for this significant buyback is set for June 24. This initiative is the largest of its kind for Bajaj Auto. In 2024, the company executed a ₹4,000 crore share buyback at ₹10,000 per share.

Analysts, however, offer a cautious outlook. Seema Srivastava from SMC Global Securities noted that the buyback size is relatively small in terms of outstanding equity capital. She indicated a theoretical retail entitlement ratio of about 4.5-5%, suggesting that the actual acceptance ratio might be limited, potentially around 10-12%. This implies that a considerable number of shares may not be tendered.

Investors are advised against purchasing shares solely for arbitrage opportunities due to the anticipated low acceptance ratio, which could reduce effective returns. While the buyback is generally favorable for existing shareholders, new retail entrants might see modest rather than extraordinary profit potential. Mahesh M Ojha from Kantilal Chhaganlal Securities suggested that participating could be rewarding, given Bajaj Auto's strong fundamentals, but emphasized assessing acceptance ratios and market conditions.