(Bloomberg) -- Bajaj Auto Ltd. will buy back shares worth as much as Rs2500 crore ($319 million) as its stock trades close to a record high.
The company’s board approved the buyback at a price as high as 4,600 rupees, the Pune-based manufacturer of two- and three-wheelers said in an exchange filing on Monday. Shares of the firm rose 1.3% to 3,861.20 rupees at the close in Mumbai, extending gains for the year to 19%.
“Around 10% of the cash that Bajaj Auto would have in the balance sheet by end of fiscal year 2023, is being paid back to shareholders in the form of buyback of shares,” said Deven Choksey, managing director at KRChoksey Investment Managers Pvt. “Paying back lower-yield cash to investors helps in improving earnings ratios.”
The buyback comes as Bajaj Auto is set to face stiff competition from bigger rivals such as Hero MotoCorp Ltd. in the switch to cleaner vehicles. Bajaj Auto earlier this month rolled out its first electric scooter from its new plant with a production capacity of 500,000 units annually, while Hero MotoCorp -- the world’s top two-wheeler maker -- is planning to launch its first electric model on July 1.
Bajaj Auto’s wholly-owned unit Chetak Technology and its vendor partners are planning to invest nearly 7.5 billion rupees in the new EV manufacturing facility. It has sold 14,000 Chetak electric scooters and received 16,000 bookings.