Shares of Pune-based two-wheeler maker Bajaj Auto surged nearly 6% to hit a record high of ₹7,059.75 in intraday trade on Wednesday, following the company’s decision to consider a share buyback at its board meeting on 8 January. The move comes a year and a half after the maker of Pulsar motorcycles conducted a ₹2,500 crore buyback of its shares in July 2022 at ₹4,600 per share through the open market route. This time, though, managing director Rajiv Bajaj has indicated the buyback is likely to be far bigger.
Shares of Bajaj Auto settled 4.91% higher at ₹6,989.4 on the Bombay Stock Exchange (BSE) on Wednesday. The company’s stock has almost doubled over the past 12 months, outperforming the Nifty auto index, which in contrast increased 46.4% during the same time. Its performance was marginally better than that of rival TVS Motor Company (up 95% over the past 12 months), which also plays in the two-wheeler and three-wheeler categories, and Hero MotoCorp, which grew 47.46% in the same period.
The board of Bajaj Auto will decide whether the buyback takes place through a tender offer or the open market on Monday. “We will close with ₹20,000 crore of cash this year. Whenever cash on books crosses ₹15,000 crore, we are looking to give back over 70% to investors," Bajaj said in an interview with television news platform CNBC-TV18.
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“It is logical to assume that the buyback size will be higher than the previous instance as the cash on the books is higher," Bajaj added. On January 26, the company will declare its financial performance for the quarter ended 31 December.
The company had cash reserves of almost ₹17,500 crore, with net free cash flow addition of ₹3,600 crore in Q2FY24.
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In December, the company recorded a 16% increase in its total wholesale dispatches, with domestic sales up 26% at 158,370 units and exports up 3% to 124,631 year-on-year. Bajaj Auto had said it expects the domestic motorcycle market to be driven by its core 125cc and above segment, and grow 4-6% over the next few months, with a gradual recovery expected for its export markets.
Meanwhile, the company is rapidly increasing its share of the fast-growing market for electric two-wheelers in India, clinching a double-digit market share in the past couple of months. In December, it accounted for 13.7% of the e-scooter segment, becoming the only player besides TVS Motor Company and Ola Electric to have an over 10% share of the market, which is largely dominated by Ola Electric.
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Bajaj Auto is set to launch a more premium, upgraded variant of its Chetak electric scooter on Friday, and is lining up launches across various price points over the next six months to expand its EV portfolio. It is also ramping up deliveries of its locally-made premium motorcycles under the Triumph brand.
“Bajaj has a diversified revenue base, which should allow it to grow profitably despite rising risks from electrification, in our view," JP Morgan said in a report in November. “The company is now showing increasing aggression on EVs including the launch of three-wheeler EVs as well as ramp up in two-wheeler EV volumes. We also expect a gradual recovery of exports in the first half of 2024."
The company had cash reserves of ₹17,500 crore, with net free cash flow addition of ₹3,600 crore in Q2FY24.
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Published: 03 Jan 2024, 02:58 PM IST
Bajaj Auto board to consider buyback of equity shares on Monday; stock hits record high | Mint - Mint
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