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Bajaj Auto Slips 7% As Board Defers Buyback Proposal, says More Deliberations Required

By: Aparna Deb

Last Updated: June 14, 2022, 16:00 IST

Bajaj Auto Defers Buyback Proposal

Bajaj Auto Defers Buyback Proposal

The board of Bajaj Auto, which held a meeting on June 14, decided to defer the share buyback plan which was brought before it for consideration.

Bajaj Auto Buyback: The board of Bajaj Auto, which held a meeting on June 14, decided to defer the share buyback plan which was brought before it for consideration. Bajaj Auto shares plunged 7.13 per cent to Rs 3,603.75 against the previous close of Rs 3,880.60 on BSE. The large-cap stock is trading higher than 100-day and 200-day moving averages but lower than 5 day, 20 day and 50 day moving averages.

The company, in a regulatory filing, said it will not move ahead with the proposed plan as of now as it requires “further deliberations”. “We wish to inform that the Board of Directors of the Company at its meeting held today i.e. 14 June 2022, has decided that further deliberations are required in order to take a decision on the proposal of buyback, and accordingly deferred the matter,” said Bajaj Auto in a stock exchange filing.

A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.

Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

The company last went for share buyback in 2000, when shareholders approved the buyback of up to 18 million equity shares at a price of Rs 400 each.

Bajaj Auto has paid dividends to shareholders since FY08, with the amount going up each year: from Rs 20 per share in FY08 to Rs 140 at the end of FY22.

Bajaj Auto: Q4 Results & May Sales

Bajaj Auto reported lower-than-expected sales data for May. It reported, total sales of 2.75 lakh units for May. Sales volumes in the previous month grew merely 1 per cent on a year-on-year basis and were down more than 34 per cent from their pre-pandemic levels in May 2019.

The muted sales performance was led by a weak month for exports for the company. Two-wheeler exports slumped 15 per cent on-year to 1.53 lakh units, while three-wheeler exports fell 67 per cent to 10,163 on-year in May.

Bajaj Auto Ltd reported 10 per cent growth in net profit for the March 2022 quarter at Rs 1,469 crore as against Rs 1,332 crore in the corresponding quarter of the previous fiscal. The higher profit was mainly due to an exceptional item of Rs 315 crore accrued as incentive receivable from the Maharashtra government under an incentive scheme. Revenue from operations, however, fell 7 per cent to Rs 7,975 crore for the period under review.

Bajaj Auto, notably, reported lower-than-expected sales data for May. It clocked a total sales of 2.75 lakh units during the month, which was below Nomura India Securities’ estimate of 3.12 lakh. Sales volumes in May grew merely 1 per cent on a year-on-year basis and were down by more than 34 per cent from the pre-pandemic levels – as recorded in May 2019.

The muted sales performance was led by a weak month for exports for the company. Two-wheeler exports slumped 15 per cent on-year to 1.53 lakh units, while three-wheeler exports fell 67 per cent to 10,163 on-year in May.

Overall exports during May plummeted 22 per cent on a year-on-year basis for Bajaj Auto, while domestic sales rose 85 percent.

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first published:June 14, 2022, 15:52 IST
last updated:June 14, 2022, 16:00 IST