Mumbai: In a first in the segment, the board of engineering major Larsen & Toubro (L&T) on Thursday approved a Rs 9,000-crore share buyback proposal to reward shareholders.
The cash-rich L&T, which is one of the most diversely held companies in the country, plans to buy back 6 crore shares at a maximum price of Rs 1,500 apiece, which is over 13 per cent premium to Tuesday's closing price of Rs 1,322.15.
The buyback is worth 4.29 per cent of the paid-up equity capital.
The announcement boosted the L&T counter by over 3.5 per cent in a dull trade, and the stock settled with a 2.30 per cent gain at Rs 1,352.50 on the BSE whose benchmark Sensex settled nearly flat with a 0.13 per cent upside.
"The buyback is a positive indication of what we are and what the economy is and where we stand. Amongst infrastructure companies, this is the first buyback," chief executive & managing director SN Subrahmanyan told reporters on the sidelines of the 73rd annual shareholders meet.
Subrahmanyan further said the company has a good amount of cash-in-hand and is hopeful that it will generate further cash from the order backlog and from the ongoing projects.
"We do have capex and as we look into the future we have plans for other businesses. We'll continue to pay dividend, but in spite of that we will continue to have surplus cash," he said adding the company has been promising its shareholders that it will increase the return on equity.
"So keeping all these in mind and the fact that we have a robust balance-sheet backlog and future earnings, we thought why not return some of the money to the shareholders to whom it belongs," Subrahmanyan said.
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