L&T sets share buyback tendering period between September 18 and 25

Indian multinational conglomerate Larsen & Toubro (L&T) has set the share buyback tendering period between September 18 and 25 when the company will buyback nearly 3.12 crore shares at a price of Rs 3,200 per equity share.

Shares of L&T were trading in the green around 10 am and hit day’s high of Rs 2,931.65 on the NSE gaining 0.85% over the previous closing price on Wednesday.

The engineering & construction major had increased the final buyback price to Rs 3,200 from Rs 3,000 earlier. Besides increasing the buyback price, the company has also approved to reduce the number of shares to be bought back from investors to 3.12 crore, which represents 2.22% of equity. The company had earlier proposed to buy back about 3.33 crore shares.

Tuesday, September 12 was the record date for L&T’s Rs 10,000 crore buyback. The record date will determine the number of shareholders who will be eligible to participate in the buyback. The company has recently received shareholders approval for the same.

This is the first buyback announced by the company since the listing.

“L&T is focused on enhancing its Return on Equity (RoE). Infact, one of the core objectives of the company’s five year strategic plan Lakshya 2026 is to maximize shareholder value through improved RoE,” said R. Shankar Raman, Whole Time Director & CFO, L&T.

The amount required by the company for the buyback is intended to be met out of current surplus or cash balances or cash available from internal accruals.Under a share buyback, the company buys back its own shares from shareholders and it is seen as a tax-efficient way to give cash back to investors. Share buyback reduces the number of shares available in the market and thereby increases the real value of the stock.

Analysts say L&T is back on the path of ROE enhancement, with buyback and dividend. CLSA said FY24’s buyback of the company will not be the last.

The brokerage reiterated its buy rating on the stock with a target price of Rs 3,080, betting on five megatrends of urbanization, climate change, mobility, digital and societal change/sustainability.

“L&T is maintaining a balance of building its core businesses, divesting defocused businesses and returning surplus cash. Hyderabad Metro and delayed M&A deals are risks,” it said.

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