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Bajaj Auto shares suffered sharp losses amid choppy trade on Tuesday as a key meeting of the automaker's board to consider a proposed buyback of equity ended with no result. The company's management said in a regulatory filing that further deliberations were required.

The Bajaj Auto stock tumbled in the final 30 minutes of the session after the announcement, finishing the day lower by Rs 196.2 or 5.1 percent at Rs 3,684.4 after gyrating within a narrow range around the flatline for much of the session.

Sources told CNBC-TV18 that the board would meet again in a few days to decide on the buyback. They said the buyback is not cancelled, and the details will be finalised during this period.

Analysts expect the first buyback by the cash-rich company to be at a healthy premium to the current stock price.

The news of the potential buyback by Bajaj Auto has propped up the stock in the past few days, despite wild swings in the overall market.

A buyback of shares is considered a tax-efficient way of rewarding shareholders.

“It is quite surprising that after giving a notice, they have deferred the buyback. Of course the board of directors can take a call to either not go ahead or to postpone or any other possibilities, but generally, it doesn’t happen," Kunj Bansal of Investment-Illiteracy.com told CNBC-TV18.

"If such major corporate actions are announced that they will be discussed in board meeting, it is presumed that they will go through," he said.

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Morgan Stanley has an 'equal-weight' rating on Bajaj Auto with a target price of Rs 4,182 per share.

In the previous buybacks by companies such as TCS and UPL, the offer price was more than 15 percent above the market price, according to the brokerage. "Assuming a similar trend, we believe the share price of Bajaj Auto could rise in the near term," Morgan Stanley said.

In an exclusive interaction with CNBC-TV18 last week, Bajaj Auto CEO Rajiv Bajaj had said: "We have been criticized for managing large amounts of Rs 15,000-20,000 crore on our books... Hard to justify such a large amount on our books."

"Our policy remains the same that over Rs 15,000 crore, we will return up to 90 percent of the annual profit to shareholders... We will do this as a mix of dividend and buyback," he said.

Nischal Maheshwari of Centrum Broking has Bajaj Auto among his top picks in the two-wheeler segment.

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First Published:Jun 14, 2022 10:49 AM IST