L&T stocks spurt 7.3% on buyback proposal

BL Internet Desk Aug 20 | Updated on August 20, 2018 Published on August 20, 2018

Larsen & Toubro shares jumped as much as 7.3 per cent to Rs 1,331, their biggest daily percentage gain since October 2017, on share buyback proposal.

Following a strong open at Rs 1,300 against the previous close of Rs 1,240.30, the stock touched intraday high of Rs 1,331 and a low of Rs 1,281.90. In terms of equity volume, 10.89 lakh shares exchanged hands in the afternoon trade.

The company shares ended higher by 6.51 per cent at Rs 1,321 on the BSE. On the NSE, the stock closed up by 6.68 per cent at Rs 1,323.05.

In a regulatory filing to the exchanges, the construction major said that the board of directors, at its meeting on August 23, will consider a proposal for buyback of equity shares. The company did not specify the buyback price.

The announcement comes after Tata Consultancy Services and HCL Technologies announced their buyback plans. TCS, at its board meeting in June, had announced that it will repurchase 7.6 crore shares (1.99 percent of the total paid-up equity) at Rs 2,100 per share for about Rs 16,000 crore. HCL Technologies had also last month announced a buyback proposal worth up to Rs 4,000 crore at Rs 1,100 per share.

Morgan Stanley analysts believe the buyback is “over and above the regular dividend and is tax efficient from a shareholder perspective”.

This is L&T's first buyback, if approved by the board, and could be taken by the market as a signal of an alternative to reward shareholders, says Morgan Stanley. The brokerage has given 'overweight' rating with a price target of Rs 1,786.

More than 3.2 million shares traded as of 0429 GMT, 1.6 times the 30-day average of 2.1 million shares.

(With inputs from Reuters)

Published on August 20, 2018
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