L&T Buyback: Cost, Acceptance Ratio, and Additional Information

28 Aug 2023 , 03:14 PM

Larsen & Turbo (L&T) announced the first buyback offer in the last eight decades last week. The price of the L&T share buyback was set at 3,000 on Tuesday of last week. The corporation would repurchase L&T shares from retail investors at a price of 3,000 per share, which is Rs 351 per share, 13.9% more expensive than the current NSE share price of 2,649 for each L&T share. 

The largest engineering company in India has stated that the magnitude of the L&T repurchase would be Rs 10,000 crore through tender offer route. The company will buyback 2.4% of total equity, however, the timeline of the share buyback has not yet been disclosed. 

Following the announcement of the L&T record date, some buying before the buyback opening offer is also anticipated to increase the share price by between Rs 100 and Rs 120 per share. Therefore, a 10% difference should be the minimum required to take advantage of this L&T buyback offer.

In accordance with SEBI regulations, a portion of 15% from the overall tender offer is designated for the small shareholder category. This category pertains to investors who have invested up to Rs 2 lakh in the company as of the specified record date. The company’s total public ownership stands at 100%, with the small shareholder category accounting for 18.52% or 25.70 crore shares.

Given the earlier details, 15% of the total buyback offer comprising 3.33 crore shares is allocated to the company’s small shareholders, equating to 49 lakh shares. Consequently, the acceptance ratio applicable to the retail category would be 2%.

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