Shares of Bajaj Auto rose over 2% in intraday trade on Friday, in an otherwise weak market, after the auto major unveiled a buyback plan. The two and three-wheeler manufacturer in an exchange filing said that its board will meet on June 14, 2022, to consider a share buyback proposal. The Pune-based auto major, however, did not disclose details regarding the share buyback plan.
Last time, the company repurchased its outstanding shares from its existing shareholders way back in 2000, when shareholders approved the buyback of up to 1.8 crore equity shares at ₹400 apiece. A share buyback is a corporate action planned by the company to reduce the number of shares in circulation, resulting in higher share value and the earnings per share (EPS).
“The meeting of Board of Directors of the Company is scheduled to be held on Tuesday, 14 June 2022, inter-alia to consider a proposal for buyback of fully paid-up equity shares of the Company in accordance with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018,” Bajaj Auto said in an exchange filing on Friday.
“Further, the trading window for dealing in the securities of the Company is closed from 9 June 2022 to 16 June 2022 (both days inclusive), for the designated persons as per the Company’s Code of Conduct framed pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended,” it added.
Boosted by share buyback plan, Bajaj Auto share price opened 2.1% higher at ₹3,960 against the previous closing price of ₹3876.90 on the BSE. During the session so far, the largecap auto stock gained as much as 2.3% to hit an intraday high of ₹3,965.75. At the time of reporting, Bajaj Auto shares were trading 0.2% lower at ₹3,868.50, reversing opening gains. In comparision, the BSE Sensex was trading 838 points lower at 54,481 levels.
The share of auto heavyweight trades higher than its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. The stock has gained 4.5% in a week, 7% over a month, and 18% so far in the calendar year 2022. In the last one year, Bajaj Auto shares delivered a negative return of nearly 8%, while it rose 15% in the past six months.
Last month, the company reported lower-than-expected sales of 2.75 lakh units, marginally up by 1% on a year-on-year basis, dented by weak exports. In April 2022, its monthly sales had dropped 20% YoY to 3,10,774 units as the company continued to face severe supply chain challenges, which impacted sales of motorcycles and commercial vehicles.
For May 2022, total exports dropped by 22% year-on-year to 1.63 lakh vehicles as against 2.11 lakh in the year-ago period. However, total domestic sales jumped 85% to 112,308 units in May 2022, versus 60,830 units in the same period last year.
Segment wise, the company sold 96,102 motorcycles in the domestic market during May 2022, up 59% on YoY basis. The sale of three wheelers in the domestic market stood at 16,206 units, up against 488 sold in the year-ago period.
For January-March quarter of 2022, Bajaj Auto reported 10% growth in net profit at ₹1,469 crore as against ₹1,332 crore in the corresponding quarter of previous fiscal. The profit was driven by an exceptional item of ₹315 crore accrued as incentive receivable from the Maharashtra government under an incentive scheme. Revenue from operations, however, fell 7% YoY to ₹7,975 crore for the period under review.