India's Bajaj Auto hits record high on $482 million share buyback

BENGALURU (Reuters) -Shares of Bajaj Auto surged to a record high on Tuesday after the automaker said it would buy back shares worth up to 40 billion rupees (nearly $482 million) at a higher-than-expected 43% premium.

The company will buy back shares at 10,000 rupees apiece, versus the stock's closing price of 6,983.85 rupees on Monday.

"The premium is very positive for the stock and exceeded expectations. However, based on the valuation, we see the stock to be overvalued," said Amit Hiranandani, automobile sector lead analyst at brokerage SMIFS.

Shares of the maker of the popular "Pulsar" range of motorcycles surged as much as 5.9% to 7,399 rupees before trimming some gains to last trade up 2.2%.

The stock is headed for its ninth consecutive week of gains - its longest weekly gaining streak since January 2021.

It surged 88% in 2023, marking its best year since 2009 and outpacing a more than 47% gain in the Nifty Auto index.

Analysts, on average, have a "buy" recommendation for nine of the 15-member Nifty Auto index, including Bajaj Auto.

Bajaj Auto last bought back shares worth 25 billion rupees ($300.2 million) between July and October 2022.

(Reporting by Manvi Pant in Bengaluru; Editing by Savio D'Souza and Sohini Goswami)