L&T’s Buyback – The Curious Case Of Rejection Of The Behemoth’s Proposal

L&T’s buyback proposal was recently rejected by SEBI on the grounds that the capital gearing ratio would exceed 2x, thereby breaching SEBIs buyback regulations. The marked difference in debt levels between the standalone and consolidated business’ is mainly due to the debt levels of L&T Finance, which by its very inherent nature of business requires a high level of debt. This capital gearing ratio clause effectively precludes any NBFC or Bank from going for a buyback. We do feel that such a blanket ban might have to be done away with in the future. Time and again we see banks buying back shares in the developed markets.Read More on NightHawk Capital.