The engineering behemoth — Larsen & Toubro (L&T) — on Tuesday announced buyback worth Rs 10,000 crore. In the process, the company has also entered into the league table of top buy backs in the country. While companies from the Information Technology (IT) sector are known for their huge buybacks, it’s the second instance where a non-IT firm intents to repurchase its shares at this altitude.
NSE
Earlier in 2012, the country’s largest company — Reliance Industries — had announced a buyback worth Rs 10,440 crore. However, the conglomerate acquired a third of the total buyback offer, which was offered at a price of up to Rs 870 each under the programme.
While Tata Consultancy Services (TCS) topped the chart with Rs 18,000 crore of buyback, other IT firms like Infosys and Wipro occupied the second and third spots with buybacks of Rs 13,000 crore and Rs 12,000 crore, respectively. In fact, the largest IT company, TCS had cumulative bought back shares worth Rs 66,000 crore between 2017 and 2022, data sourced from primedatabase.com revealed.
| COMPANY | OFFER AMOUNT (Rs.cr.) | |
| 1 | TCS | 18,000 |
| 2 | TCS | 16,000 |
| 3 | TCS | 16,000 |
| 4 | TCS | 16,000 |
| 5 | INFOSYS | 13,000 |
| 6 | WIPRO | 12,000 |
| 7 | WIPRO | 11,000 |
| 8 | WIPRO | 10,500 |
| 9 | RIL | 10,440 |
| 10 | L&T | 10,000 |
Source : primedatabase.com
The buyback proposal of L&T is subject to the approval of shareholders. Additionally, the Board of Directors also approved a special dividend of Rs 6 per equity share. “These proposals underline the confidence of the company in achieving its growth plans and endorses the financial strength,” L&T said in an exchange filing.
L&T may offer to buy 2.4 percent of the fully paid up equity shares, representing 3.33 crore shares through the tender offer route on the exchanges. The buyback price of Rs 3,000 is 17.1 percent premium to current market price of Rs 2,560.90 per shares.
The equity market regulator Securities and Exchange Board of India (SEBI) had rejected L&T's Rs 9,000 crore planned buyback in 2019 on the ground of high debt at consolidated level. However, after the recent consolidation and transfer of non-core assets, the company could improve its debt equity ratio. The net debt-equity ratio has improved to 0.62:1 as at March 31, 2023, from 0.81:1 as at March 31, 2022.
Shares of L&T have gained 23 percent so far this year, against nine percent gains clocked by the benchmark Nifty50.
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