28-Jul-2023
2 mins read
Larsen and Toubro, the engineering behemoth, have received approval from its board to buy back 3.33 crore equity shares through the tender offer route. The buyback amount is Rs 10,000 crore, and the buyback price is Rs 3,000 per share, at a 17% premium from the current market price. It would become the largest buyback ever if the board decided to utilize the buyback amount fully. Reliance Industries declared a buyback of Rs 10,440 crore; however, only Rs 3,361 crore was used.
In a share buyback, a company repurchases its shares from shareholders, a tax-efficient method to return cash to investors. This action reduces the total number of shares available in the market, increasing the stock’s actual value.
Suppose the Securities and Exchange Board of India approves this buyback. In that case, it is expected to be primarily funded through the company’s reserves and surplus, as stated by a source familiar with L&T’s top management.
This is the second attempt by L&T to propose a buyback plan. The first attempt was made in 2018-19 to buyback 6.1 Cr shares at Rs 1,475. However, Sebi disapproved of its buyback proposal because its consolidated debt-to-equity ratio would be exceeded 2:1 after this buyback.
Since then, Sebi (Securities and Exchange Board of India) has made changes to its buyback regulations, specifically for companies that have non-bank financial companies (NBFCs) or housing finance companies as their subsidiaries.
According to the amendments introduced by Sebi, companies like L&T would be eligible for conducting a buyback if the combined value of their secured and unsecured debts owed in relation to the paid-up capital and free reserves after the buyback is less than 2:1 on both a standalone and consolidated basis. However, this calculation would exclude the company’s subsidiaries that are of the specified nature (NBFCs or housing finance companies).
Company Details
Incorporated in 1946, Larsen & Toubro Limited (L&T) is a distinguished Indian multinational company engaged in EPC Projects, Hi-Tech Manufacturing, and Services, with a presence in over 50 countries.
The company operates in 8 countries with its overseas offices and global supply chain.
L&T’s diverse businesses include a wide range of sectors: Construction, Buildings & Factories, Transport Infrastructure, Heavy Civil Infrastructure, Smart World & Communication, Water & Renewable Energy and Power Transmission & Distribution.
With a diverse portfolio of products and services, L&T serves various industries, prioritising sustainable growth and leveraging technology in its endeavours.
L&T Limited Buyback 2023 Detail
| Issue Period | September 18, 2023 – September 25, 2023 |
| Security Name | Larsen & Toubro Limited |
| Issue Type | Tender Offer |
| Issue Size (Shares) | 31,250,000.00 |
| Issue Size (Amount) | Rs 10,000.00 Crores |
| Buyback Price | Rs 3,000 per share |
| Face Value | Rs 2 per share |
| Listing At | BSE, NSE |
Company Financials of L&T Limited Buyback (In Crore)
| Period Ended | Total Assets | Total Revenue | Profit After Tax |
| 31-Mar-22 | 319,028 | 156,521 | 14,495 |
| 31-Mar-23 | 329,722 | 183,341 | 12,531 |
The necessity of the L&T Ltd Buyback
The necessity of L&T Ltd Buyback is not announced yet.
Lead managers for L&T Ltd Buyback
Lead managers of the L&T Ltd Buyback are not declared yet.
FAQs
1 What is the L&T Ltd Buyback?
L&T Limited Buyback is a program Larsen & Toubro Limited initiated to repurchase its equity shares from existing shareholders.
- What is the buyback price per share?
The L&T limited offer price is Rs 3000 per share.
- What is the issue type of L&T Ltd Buyback?
The L&T Ltd Buyback issue type is a tender offer.
- When is the issue period for the L&T Ltd Buyback?
The issue period is yet to be announced.
- What is the face value of the shares?
The face is Rs 2 per share.
- What services does L&T Ltd offer?
Larsen & Toubro Limited is an Indian MNC that offers services in EPC Projects, Hi-Tech Manufacturing, and Services. With a global presence, the company operates in over 50 countries.