The board of Bajaj Auto Ltd on Monday approved a share buyback proposal of up to Rs 2,500 crore — at a price not exceeding Rs 4,600 apiece. The company had earlier deferred the proposal on June 14 saying the board needs more time to finalise the details.

The buyback announcement failed to impress the Street with the shares of the company closing at Rs 3,862.05— a gain of 1.29 per cent or Rs 49.25 — after rising 3.69per cent to a day’s high of Rs3,953.50 on the BSE.

Investors were disappointed to know that the company would buy back the shares under the stock exchange route instead of the tender offer mechanism. In a regulatory filing, Bajaj Auto said it will acquire the shares from the open market through the stock exchange mechanism for a sum not exceeding Rs 2,500 crore, which is 9.61 per cent of the paid-up share capital and 8.71 per cent of free reserves. ``Subject to the market price of the equity shares being equal to or less than the maximum buyback price, the indicative maximum number of equity shares proposed to be bought back, would be54,34,782 equity shares, comprising approximately 1.88 percent of the paid-up share capital of the company as of June 27, 2022,’’ Bajaj Auto said in a statement.

The company added that it will utilise at least 50 per cent of the amount earmarked as the minimum buyback size. Based on the minimum buyback size and maximum buyback price, it would purchase a minimum of 27,17,392 shares.

Market circles said the buyback size was small when compared with the surplus cash and cash equivalents of Rs 19,090 crore of the company during the quarter ended March 31, 2022. The price of Rs 4,600 per share marks a premium of 21per cent to its previous closing price of Rs 3,812.80 on the Bombay Stock Exchange.