Summary of this article
Bajaj Auto repurchases shares at Rs 12,000 each.
Tendering window for eligible investors opens on July 1.
Buyback premium gains are now taxed as capital gains.
Shares of Bajaj Auto are in focus today following the company's announcement related to the buyback of its shares. Shares of the company inched higher by over 1 per cent compared to an intraday high of Rs 9,750 apiece on the NSE.
The two-wheeler maker has officially initiated its largest-ever share buyback offering investors an opportunity to tender their holdings at a significant premium to the current market price.
Bajaj Auto Buyback: Key Details
Bajaj Auto announced on June 29 that it has announced the dates for tendering shares to participate in its Rs 5,632.80 crore share buyback program. The company plans to repurchase up to 46.94 lakh fully paid-up equity shares, which aggregates to nearly 1.68 per cent of its total paid-up equity share capital.
The buyback price for the shares is Rs 12,000 per share and is being executed entirely through the tender offer route. The record date to determine the eligibility of shareholders was set on June 24, 2026. Investors who held the company's shares on the record date will be eligible to participate in the buyback. Thus, eligible shareholders will be able to participate in the buyback in the tendering window, which will remain open from July 1 to July 7, 2026. Notably, the settlement of bids on the stock exchanges is scheduled to be completed by July 14.
Potential Gains for Participating Shareholders
Investors look forward to buybacks as they tend to offer a premium rate over the open market price. On the record date of June 24, Bajaj Auto shares closed at Rs 9,750 on the National Stock Exchange (NSE). With the buyback price fixed at Rs 12,000 per share, eligible investors who held the company’s shares on that day stand to gain a gross profit of Rs 2,250 for every share accepted in the offer, which translates to a premium of roughly 23 per cent over the record date price.
The stock is currently trading at Rs 9,726 per share, which means investors are likely to make gains of 23.4 per cent if they sell their shares in the buyback. However, eligible shareholders must note that these gains apply only to the shares that are accepted by the company, as the offer is capped at 46.94 lakh shares.
What Investors Should Know
Buybacks signal that the company’s management is confident about the company’s cash generation ability and future business prospects. Notably, the promoters and promoter group entities will not participate in the buyback. Their non-participation decreases the overall competition for tendering shares, leading to a potentially better acceptance ratio for public and retail shareholders.
How Buyback Proceeds are Taxed
Under the Income Tax Act, 2025, which became effective from April 1, 2026, buyback taxation has changed. Prior to April 1, buybacks were taxed as dividend income in the hands of the shareholders. Before the taxation as dividend income rule was enforced, the company conducting the buyback paid a flat tax on the buyback amount.
However, post April 1, the selling shareholder bears the tax liability for the buyback. In the case of Bajaj Auto’s buyback, the difference or premium between the buyback price of Rs 12,000 and the investor's original cost of acquisition will be taxed as capital gains.
Shares held for more than 12 months are subject to Long-Term Capital Gains (LTCG) tax at 12.5 per cent, while shares held for less than a year incur Short-Term Capital Gains (STCG) tax of 20 per cent. Promoters face a special additional tax structure to curb any tax misuse.
Sebi's New Rules For Buybacks
The capital market regulator has recently introduced new proposals to reintroduce open-market buybacks through stock exchanges. Under the open-market buyback system, the buyback is conducted at the open market price instead of a set price like the tender-offer route.
