Bajaj Auto's Rs 5,633 Crore Share Buyback Opens: Key Details for Investors

Two-wheeler major Bajaj Auto's share buyback worth Rs 5,633 crore opened on Wednesday, as the company plans to buy back 46.94 lakh shares at Rs 12,000 per share, which is around 24% higher than the previous closing price.

Bajaj Auto's buyback will remain open from July 1 to July 7 during which the company aims to buy back up to 1.68% of the total paid-up share capital. The record date for the buyback was fixed on June 24, which means that only those shareholders who owned shares of the company on that day would be eligible to tender shares in the offer, and investors taking fresh positions today will not qualify.

Key things to know about Bajaj Auto's buyback

Under Bajaj Auto's buyback offer, eligible shareholders in the reserved category for small shareholders are entitled to tender 17 equity shares for every 61 equity shares held as on the record date (June 24). For shareholders falling under the general category, the buyback entitlement has been fixed at 17 equity shares for every 525 equity shares held on the record date.

Buyback of shares refers to a corporate action where a company repurchases its own shares from the existing shareholders. Usually, the company purchases the shares at a higher price than the current levels, encouraging investors to participate. Notably, Bajaj Auto has said that its promoters and promoter groups have indicated their intention not to participate in the buyback.

Also read: Bajaj Auto buyback opens July 1; shareholders can tender shares till July 7

How can you participate in Bajaj Auto buyback?

Bajaj Auto shareholders can participate in the share buyback by placing a bid through a stock broker registered either with the BSE or the NSE via a separate window that would open up on the stock exchanges. The registrar will complete the verification of tendered shares by July 10, 2026. Thereafter, the final acceptance or rejection of shares tendered under the buyback will be communicated to the stock exchanges by July 13.

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After the buyback, Bajaj Auto will return the unaccepted shares by July 14, as per the schedule shared by the two wheeler maker in its exchange filing. “The Buyback reinforces the Company’s commitment to its shareholders by returning surplus cash to them in an effective and efficient manner, and is expected to improve its earnings per share and return on equity,” it added.

How much profit can retail investors make from Bajaj Auto buyback?

Let’s take an investor who bought 20 shares of Bajaj Auto at Rs 9,750 apiece before the record date and is planning to tender shares in the buyback for example. The total value of her shares as on the record date stood at Rs 1,95,000, making her eligible for Bajaj Auto's reserved category for small shareholders (less than Rs 2 lakh).

As per the entitlement ratio, she will be entitled to tender around 6 shares out of her 20 stock holding (nearly 27.9%). It is important to note that not all shares she tenders may be accepted in the buyback process.

However, for the shares accepted as part of the buyback, she will earn Rs 2,250 per share at the buyback price of Rs 12,000 per share, much higher than what she would have made if she sold the shares at the market price of around Rs 9,692 apiece.

Also read: Key things to know about Bajaj Auto's Rs 5,633 crore share buyback

Should you participate in Bajaj Auto’s buyback?

All shareholders who held Bajaj Auto shares in their demat accounts as on the record date (June 24) will be eligible to tender shares in the buyback. 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) with the record date price of Rs 9,750 apiece.

"Assuming an acceptance ratio between 45% and 65%, a small shareholder is likely to get a return of 9.5% to 14.9% on his total holding. The return potential can be higher if the acceptance ratio is higher or the stock appreciates above Rs 9,750," he said, advising investors to participate in the buyback.

Harshal Dasani, Business Head at INVasset PMS, also said that the reserved-category mechanics make participation a worthwhile arithmetic exercise even on a post-tax basis for retail shareholders already holding the stock. "Retail shareholders (holdings up to Rs 2 lakh value) sit in a reserved 15% pool of 7.04 lakh shares worth Rs 845 crore, and historically Bajaj Auto's 2024 buyback delivered final retail acceptance ratios near 26%. If a similar acceptance pattern holds, a retail shareholder tendering all eligible shares can expect roughly 25-26% of holdings to be accepted at the Rs 12,000 price, with the residual returning at market price,” he said.

Vaqarjaved Khan, Senior Analyst of Fundamental at Angel One, meanwhile highlighted that with only 1.68% of equity being repurchased, the theoretical entitlement ratio works out to just 4.5–5%. "That means most retail shareholders will see only a small slice of their tendered shares accepted, with the rest sold back at prevailing market price. The effective blended gain is far lower than the headline premium implies. Still, tendering costs nothing and any acceptance is pure upside so shareholders should tender their full entitlement regardless of the ratio," he added.

Also read: Bajaj Auto sets June 24 as record date for Rs 5,633 crore share buyback. Here’s all you need to know

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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