L&T’s ₹10,000 cr share buyback opens; know the details

Shares of engineering & construction major Larsen & Toubro Ltd surged 0.50% today amid the opening of ₹10,000-crore share buyback today. The buyback, which is the first buyback by the conglomerate in its 85-year-long history, will close on September 25, 2023.

The L&T share opened flat at ₹2,910.8 and surged to an intra-day high of ₹2,910.8. Currently, the L&T share is trading just below the 52-week high of ₹3,008 achieved on September 12, 2023. At this share price, the m-cap of the company stands at ₹4,10,582.96 crore.

The company has proposed to buy back up to 3,12,50,000 equity shares of face value of ₹2 each, up to 2.22% of its total equity shares.

The shares are proposed to be bought back at a price of ₹3,200 per share, a price that was revised from ₹3,000 per share proposed earlier, and which is over 9% higher than Friday’s closing share price.

The buyback amounts to the aggregate consideration of up to ₹10,000 crore, which is up to 14.06% and 11.97% of the aggregate of fully paid-up equity share capital and free reserves, respectively.

The L&T equity shares are listed on NSE and BSE. Further, its GDS are listed on the Luxembourg Stock Exchange and admitted for trading on the London Stock Exchange.

The buyback will involve reservation for small shareholders, which will be 15% of the number of equity shares the company proposes to buyback, or their entitlement, whichever is higher.

On 26 July, the board of L&T, while announcing its first-quarter earnings report, had approved the buyback of equity shares of up to ₹10,000 crore at ₹3,000 per share, a premium of 17% to the company’s market price of ₹2,562 then.

After the buyback, the standalone earnings per share will rise to ₹57.12 from ₹55.85, while diluted earnings per share will rise to ₹57.08 from ₹55.81 earlier.

The book value per share will be revised to ₹447.73 from ₹508.92 earlier, while the net worth will go down to ₹61,527.95 from ₹71,527.95 earlier.

The funds for the buyback will be sourced out of the free reserves, current balances of cash and cash equivalents, and or internal accruals of the company.

For the April-June quarter of FY24, L&T posted a 46.5% year-on-year (YoY) growth in consolidated net profit at ₹2,493 crore from ₹1,702 crore in the corresponding quarter of the previous year.

The consolidated revenue stood at ₹47,882 crore for Q1 FY24, recording a YoY growth of 34%, primarily aided by the execution of a healthy opening order book in its projects and manufacturing portfolio. International revenues during the quarter at ₹19,022 crore, constituting 40% of the total revenue.