Engineering and construction major Larsen and Toubro (L&T ) will buy back as much as ₹9,000 crore worth shares, its first ever return of capital to shareholders.
The company’s board has approved the proposal to buy back six crore shares, representing 4.29% of the total paid-up equity share capital, at a maximum price of ₹1,500 apiece, the company said in a statement.
The offer represents a more than 13% premium to Tuesday’s closing price of ₹1,322.15. The buyback is subject to shareholders’ approval.
L&T’s cash and cash equivalent on a standalone basis more than doubled to ₹8,600 crore in last one year as the company raised almost ₹4,500 crore by divesting assets, including IPO proceeds from L&T Infotech and L&T Technology Services, sale of the general insurance unit and the Kattupalli Port.
‘Positive indication’
“It’s a positive indication of what we are, what the economy is, of where we stand in this country and in this economy,” said S. N. Subrahmanyan, CEO & MD. Amongst many manufacturing, engineering, construction and infrastructure oriented company, as far our knowledge goes, its for the first time in the history of the company has gone for a buyback. We have cash on hand, and as we look forward, we see that we will continue generate cash from the backlog we have,” he said.
“We do have capex, we do have propositions for other businesses, of-course we will continue to pay dividends. In spite of doing all these, we continue to have surplus cash in hand. Further, we have been promising our shareholders to improve the return on equity and networth to a certain extent. So, keeping all these points and that fact that we have a robust balance sheets, backlog and future earnings as we see it, the idea was, why not return some of the money to shareholders to whom it actually belongs,” he added. That was the principal rationale for the buyback. It’s a statement of how we believe the future is,” he added.
