Overview of Bajaj Auto's Share Buyback
Bajaj Auto, a leading two-wheeler manufacturer in India, has initiated a significant share buyback worth Rs 5,633 crore. This buyback involves repurchasing 46.94 lakh shares at a price of Rs 12,000 per share, which is approximately 24% higher than the previous closing price. The buyback period is open from July 1 to July 7, with the company aiming to acquire up to 1.68% of its total paid-up share capital.
The record date for the buyback was set on June 24, meaning that only shareholders who owned shares on this day are eligible to participate. Investors who acquire shares after this date will not be eligible to tender their holdings during the buyback period.
Key Details About the Buyback
Under Bajaj Auto’s buyback offer, there are specific entitlement ratios for different categories of shareholders. Small shareholders, who fall under the reserved category, are entitled to tender 17 equity shares for every 61 shares they hold as of the record date. For general category shareholders, the entitlement ratio is 17 shares for every 525 shares held.
A share buyback is a corporate action where a company repurchases its own shares from existing shareholders. Typically, companies offer a price higher than the current market value to encourage participation. Notably, Bajaj Auto's promoters and promoter groups have indicated that they will not take part in this buyback.
How to Participate in the Buyback
Shareholders interested in participating in the buyback can place bids through stock brokers registered with either the BSE or NSE. A separate window will be opened on the stock exchanges for this purpose. The registrar is expected to complete the verification of tendered shares by July 10, 2026. Following this, the final acceptance or rejection of shares will be communicated to the stock exchanges by July 13.
After the buyback process, any unaccepted shares will be returned to the shareholders by July 14. According to Bajaj Auto, the buyback is a strategic move to return surplus cash to shareholders, potentially improving earnings per share and return on equity.
Potential Gains for Retail Investors
Let’s consider an example of a retail investor who purchased 20 shares of Bajaj Auto at Rs 9,750 each before the record date. The total value of her shares on the record date was Rs 1,95,000, making her eligible for the reserved category for small shareholders (with holdings less than Rs 2 lakh).
Based on the entitlement ratio, she would be eligible to tender around 6 shares out of her 20 holdings, which is nearly 27.9%. However, it is important to note that not all of her tendered shares may be accepted. For the shares that are accepted, she would receive Rs 12,000 per share, significantly higher than the market price of approximately Rs 9,692 per share.
Should You Participate in the Buyback?
All shareholders who held Bajaj Auto shares in their demat accounts on the record date (June 24) are eligible to participate in the buyback. Experts suggest that the buyback offers a favorable opportunity for retail investors.
Sunny Agrawal, Head of Fundamental Research at SBI Securities, explained that the entitlement ratio for small shareholders stands at 27.9% (17 shares for every 61 shares held). Assuming an acceptance ratio between 45% and 65%, a small shareholder could expect returns ranging from 9.5% to 14.9% on their total holding. The return potential could be even higher if the acceptance ratio is higher or if the stock appreciates above Rs 9,750.
Harshal Dasani, Business Head at INVasset PMS, noted that the reserved-category mechanics make participation a worthwhile exercise for retail shareholders. He mentioned that retail shareholders (with holdings up to Rs 2 lakh) are part of a reserved pool of 7.04 lakh shares worth Rs 845 crore. Historically, Bajaj Auto’s 2024 buyback delivered acceptance ratios near 26%, suggesting similar results may be expected this time.
Vaqarjaved Khan, Senior Analyst at Angel One, highlighted that with only 1.68% of equity being repurchased, the theoretical entitlement ratio works out to just 4.5–5%. This means most retail shareholders will see only a small portion of their tendered shares accepted, with the rest sold back at the market price. Despite this, he advised shareholders to tender their full entitlement, as any acceptance would provide additional upside.
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