L&T share buyback: India’s infrastructure major Larsen & Toubro has announced a share buyback programme for Rs 9,000 crore. The company has cash and liquid assets of about Rs 17,425 crore and a consolidated debt of Rs 1.08 lakh crore. The buyback offer will be made via the tender offer route and about 6 crore shares aggregating to 4.29% of the total paid equity share capital – will be bought back. Even as investors decide whether to participate in the buyback, we take a look at 3 key things to know.
L&T buyback: 3 key things to know
The company has fixed the specific price of buyback of Equity Shares at Rs 1,475. L&T shares are trading at Rs 1,271, up by more than 2% this morning. L&T’s buyback price of Rs 1,475 implies a return of about 16% from the current prices.
L&T has fixed the record date as October 15th for the issue. “We would like to inform you that the Company has fixed Monday, October 15, 2018 as the Record Date for the purpose of determining the entitlement and the names of the equity shareholders who shall be eligible to participate in the buyback offer of the Company,” L&T said in a statement.
Strategic rationale for buyback
The primary rationale for announcing the buyback programme is to return excess cash to shareholders, and improve their return on equity, SN Subrahmanyan, managing director and CEO, L&T said recently. “We do have capex as we look into the future, we do have propositions of other businesses. Of course, we will continue to pay the dividend. Inspite of doing all this we will have surplus cash-on-hand. We have been promising our shareholders that we will be increasing our return on equity to a certain extent, and it is in that direction,” he said.