Bajaj Auto has announced its plans to repurchase shares at a premium of 43 percent, with the buyback price set at Rs 10,000 per share. This represents a significant increase from the previous day’s closing price of Rs 6,983.85. The approval of this share buyback plan amounting to Rs 4,000 crore has resulted in Bajaj Auto shares reaching a record high on Tuesday.
The market has responded positively to this unexpected premium, leading to a surge in the renowned motorcycle manufacturer’s shares. Bajaj Auto, particularly known for its popular “Pulsar” range, saw its shares rise by as much as 5.9 percent, reaching Rs 7,399 before settling with a 1.5 percent gain at around 12:30 pm.
This rally marks the ninth consecutive week of gains for Bajaj Auto, making it the company’s longest weekly winning streak since January 2021. It is worth noting that the stock has experienced an impressive 88 percent surge in 2023, making it the most successful year for Bajaj Auto since 2009. This growth has surpassed the gain of over 47 percent in the Nifty Auto index.
Amit Hiranandani, the lead analyst for the automobile sector at brokerage SMIFS, has expressed his positive outlook on the stock due to the premium, stating that it has exceeded expectations. However, he also cautioned about potential overvaluation based on current valuations.
Bajaj Auto’s share buyback program is a strategic move following their previous repurchase of Rs 2,500 crore from July to October 2022.
The positive sentiment surrounding the stock is further bolstered by analysts who predominantly recommend a “buy” stance, showcasing their optimism towards Bajaj Auto’s performance.