The Board of Larsen & Toubro (L&T) approved a proposal to buy back Rs 9,000 crore worth shares, citing cash on hand and no capital expenditure in near future. Under the proposal, first for the company and the segment, L&T plans to buy back six crore shares at a maximum price of Rs 1,500 apiece, which is over 13% premium to Tuesday’s closing price of Rs 1,322.15.
The buyback is worth 4.29% of the paid-up equity capital. Prior to the 73rd Annual General Meeting (AGM) on Thursday, the Board met and approved the buyback proposal.
Shareholders who spoke at the AGM exuded confidence in the company, stating that they prefer holding on to the shares instead of accepting the buyback offer.
A couple of the shareholders said they won’t go for the offer even if they are given double the amount.
Post-AGM, while interacting with the media on the buyback offer, S N Subramanyan, managing director and chief executive officer, L&T, said, “As far as our knowledge goes, this is the first time an infrastructure company has gone for a buyback.”
Explaining the rationale behind the decision, Subramanyan said, “We have cash in hand, and as we look forward, we do believe we will generate further cash from the backlog (of projects) we have and from the projects that are going on. We do have capital expenditure as we look into the future.”
The buyback offer is part of the “further increase in return on equity”, he said, adding that the company would continue to pay dividend
SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.