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L&T's board approves Rs 90-billion share buyback proposal at Rs 1500 apiece

L&T's board approves Rs 90-billion share buyback proposal at Rs 1500 apiece

The board of engineering conglomerate Larsen & Toubro (L&T) approved on Thursday the proposal to buy back 4.29 per cent of its paid-up equity capital, valued at Rs 90 billion. This was L&T's first-ever share buyback proposal. "The company at its meeting held today has approved a proposal to buy back up to 6,00,00,000 equity shares of the company being 4.29% of the total paid up equity share capital, at a maximum price of Rs 1500 per equity share for an aggregate amount of Rs 90 billion," the company said in its statement to BSE. With this, L&T has joined the list of companies such as Tata Consultancy Services (buy-back size Rs 160 billion) and HCL Technologies (Rs 40 billion), which have announced buybacks in the last few months. According to current regulations, a company cannot exceed 25 per cent of its paid-up capital plus reserves while offering a buyback.

As per Capitaline data, L&T's net worth (equity plus reserves) stood at Rs 492 billion at the end of the financial year ending March 2018, on a standalone basis. It had a debt of Rs 106 billion, while the combined figure of cash and bank balances, investment in quoted government securities, bonds, debentures and unquoted units stood at Rs 87 billion, at the end of last fiscal year. For L&T, which has divested from a couple of non-core assets in the last few quarters, a buyback will translate into cash outflows. However, analysts tracking the company do not read much into the development and see it as a step to consider in cases where the company thinks the stock is undervalued. Test

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First Published: Fri, August 24 2018. 18:22 IST
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