Bajaj Auto Board to Discuss Share Buyback on 8-Jan-2024

On 3-Jan-2024, Bajaj Auto's stock made a jump of over 5%, reaching a milestone by crossing the ₹7,000 mark for the first time. This surge was fueled by the news that the company's board is going to discuss a proposal for buying back shares on 8-Jan-2024. By the end of the market session, stock was trading at ₹6,957.80 on NSE and ₹6,954.0 on BSE. After yesterday's rally, stock is down 1% on 4-Jan-2024, trading at ₹6,915.50 in the early trading session.

Current & Previous Buyback Details

Bajaj Auto's board is set to meet on Monday to discuss the possibility of a buyback of fully paid-up equity shares. CEO, Rajiv Bajaj, gave a clue of a larger buyback, pointing out that the company's cash reserves are anticipated to reach approximately ₹20,000 crores by year-end. He also mentioned the company's goal to return over 70% to investors whenever the cash on books exceeds ₹15,000 crores.

Earlier buyback, executed through the open market stock exchange at ₹4,600 per share, was valued at ₹2,500 crore. With increased cash reserves this time, management expects a larger buyback. Following the announcement stock hit an all-time high of ₹7,059.75 and closed at ₹6,958.60 showing a 4.44% increase.

Bajaj Auto Performance

Bajaj Auto shares have shown strong growth soaring by 88% in 2023 and ranking as the second-best performers on Nifty 50 index. Over the past year share price has increased by 93.46%. However, with a relative strength index of 75.5, there's a cautionary note suggesting the stock may be overbought.

Among 46 analysts tracking the company, 26 recommend 'buy,' 12 suggest 'hold,' and eight advise 'sell.' Bloomberg data indicates an average 12-month analyst price target reflecting a potential downside of 17.2%. Given the current market dynamics investors should carefully consider these perspectives.

Final Words

Bajaj Auto's increasing stock value and the talk of a share buyback are making waves in the market. This highlights the company's strong financial position and smart decisions by its board. Investors are eager to hear more after the board meeting on 8-Jan-2024, especially about how the buyback might shape the company's future. Although the stock is on the rise due to the expected buyback market signals are suggesting a cautious approach reminding investors to carefully assess any potential risks before making decisions.