L&T shares rally over 3% to hit new high on hike in buyback price
«L&T is focused on enhancing its Return on Equity (RoE). In fact, 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.
Besides increasing the buyback price, the company also approved reducing 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.
Today is the record date for L&T's Rs 10,000 crore buyback, which will be done through the tender route.
The record date will determine the shareholders 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.
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 to raise its ROE by 89 basis points.
