Bajaj Consumer Care Limited , a prominent player in the Indian consumer goods sector, has announced a significant share buyback program, demonstrating confidence in its financial position and commitment to enhancing shareholder value.

Buyback Details

The company's Board of Directors has approved a buyback of up to 64,34,482 equity shares, representing 4.69% of the total equity shares, at a price of INR 290 per share. The total buyback size amounts to INR 186.60 crore, excluding transaction costs.

Premium Pricing

The buyback offer price of INR 290 per share represents a substantial premium:

• 66.50% over the three-month volume-weighted average price on BSE
• 20.63% over the closing price on the announcement date

Financial Implications

The buyback size constitutes 23.70% and 24.88% of the company's aggregate paid-up equity capital and free reserves based on the latest audited standalone and consolidated financial statements, respectively.

Shareholder Approval and Timeline

Bajaj Consumer Care is seeking shareholder approval through a postal ballot with e-voting. The results of the postal ballot will be announced after the voting period concludes.

Exclusions and Reservations

The buyback excludes promoters and promoter group members. Notably, 15% of the buyback is reserved for small shareholders, as defined by SEBI regulations.

Funding and Objectives

The company plans to fund the buyback through free reserves and internal accruals, without resorting to borrowed funds. This move aims to return surplus cash to shareholders and potentially improve return on equity.

Market Impact

The announcement has likely sparked interest among investors, given the attractive premium offered. The buyback could potentially lead to a reduction in the equity base, which may have a positive impact on earnings per share and other financial metrics.

Compliance and Execution

Bajaj Consumer Care has confirmed compliance with all relevant regulations, including maintaining the minimum public shareholding requirement. The company has engaged KFin Technologies Limited to facilitate the e-voting process for shareholders.

This share buyback represents a significant corporate action by Bajaj Consumer Care, reflecting its strong financial position and commitment to delivering value to its shareholders. Investors and market analysts will be closely watching the execution of this buyback and its impact on the company's stock performance in the coming months.

Bajaj Consumer Care Limited has approved a significant share buyback and a subsidiary demerger, marking important strategic moves for the company.

Share Buyback Details

The company has given the green light to a share buyback of up to 6,434,482 equity shares, which represents 4.69% of the total paid-up capital. The buyback will be conducted at ₹290.00 per share, with the total size not exceeding ₹18,660.00 lakhs. This buyback will be executed through the tender offer route on a proportionate basis and requires shareholder approval via postal ballot. Notably, the promoters of the company will not participate in this buyback.

Subsidiary Demerger

In addition to the buyback, Bajaj Consumer Care has approved a demerger scheme to transfer the manufacturing and distribution business of its wholly-owned subsidiary, Vishal Personal Care Limited, into Bajaj Consumer Care Limited. The demerged business reported a turnover of ₹5,251.60 lakhs, which constitutes 99.23% of the subsidiary's total turnover and 5.57% of Bajaj Consumer Care's standalone turnover.

Rationale and Impact

The demerger is aimed at achieving several strategic objectives:

• Integration synergies
• Better supervision
• Efficient resource utilization
• Enhanced shareholder value

It's important to note that no equity shares will be issued as part of this demerger, and there will be no change in the shareholding pattern of the company.

Market Reaction

Prior to this announcement, shares of Bajaj Consumer Care had experienced a slight decline of 1.14% to ₹239.78 on Friday. This dip came as investors were anticipating the company's board meeting scheduled for July 24, where the buyback proposal was to be considered.

Previous Buyback and Stock Performance

This marks the second consecutive year that Bajaj Consumer Care has pursued a buyback strategy. Last year, the company executed a share buyback amounting to ₹166.49 crore at ₹290.00 per share through the tender offer route. Despite the recent dip, the stock has shown strong performance over the past month, with a notable gain of 18.00%, indicating positive investor sentiment.

Regulatory Context

It's worth noting that the frequency of share buybacks has seen a decline since October, following the introduction of new regulations that shifted the tax burden associated with buybacks from companies to shareholders.

Conclusion

The approved share buyback and subsidiary demerger represent significant strategic moves for Bajaj Consumer Care. These decisions reflect the company's commitment to enhancing shareholder value and optimizing its operational structure. Shareholders and market analysts will be closely watching how these developments impact the company's performance and stock valuation in the coming months.