Bajaj Auto defers share buyback plan; stock down 4.8%

Two-wheeler major Bajaj Auto has deferred the share buyback proposal, which was expected to be finalised today. The company board during a meeting today decided that more deliberations are needed to reach a final decision on the buyback plan.

"The Board of Directors of the Company at its meeting held today i.e. 14 June 2022, has decided that further deliberations are required in order to take a decision on the proposal of buyback, and accordingly deferred the matter," the company informs the stock exchanges.

Bajaj Auto had decided to consider the buyback proposal of fully paid-up equity shares of the company on June 9. Amid the deferment of the share buyback plan, the Bajaj Auto stock reacted sharply, closing 4.83% or 187.30 points down at ₹3,693.95 on the National Stock Exchange (NSE). Meanwhile, the BSE Sensex ended 0.29%, or 153.13 points, lower at 52,693.57, while Nifty 50 fell 0.27%, or 42.30 points, to 15,732.10.

Before this, the Pune-based two and three-wheeler manufacturer had repurchased the outstanding shares from its existing shareholders way back in 2000, when shareholders approved the buyback of up to 1.8 crore equity shares at ₹400 apiece.

A share buyback is a corporate action planned by the company to reduce the number of shares in circulation, resulting in higher share value and the earnings per share (EPS).

The large-cap stock has been down 3.13% in a week, and 0.59% over a month, but it's 12.12% up in the past six months. The stock has risen 12.72% in the year-to-date period, while it has dropped 10.73% in the past one year.

Dented by weak exports, Bajaj Auto had in May reported lower-than-expected sales of 2.75 lakh units, though they were marginally up by 1% on a year-on-year basis. In April 2022, its monthly sales dropped 20% YoY to 3.1 lakh units as it continued to face severe supply chain challenges, which impacted sales of motorcycles and commercial vehicles.

For May 2022, Bajaj Auto exports dropped by 22% year-on-year to 1.63 lakh vehicles as against 2.11 lakh in the year-ago period. However, total domestic sales jumped 85% to 112,308 units in May 2022, versus 60,830 units in the same period last year. Segment-wise, the company sold 96,102 motorcycles in the domestic market during May 2022, up 59% on a YoY basis. The sale of three-wheelers in the domestic market stood at 16,206 units, up against 488 sold in the year-ago period.

For the January-March quarter of 2022, Bajaj Auto had reported 10% growth in net profit at ₹1,469 crore compared to ₹1,332 crore in the corresponding quarter of the previous fiscal. The profit was driven by an exceptional item of ₹315 crore accrued as incentive receivable from the Maharashtra government under an incentive scheme. Revenue from operations, however, fell 7% YoY to ₹7,975 crore during the said quarter.