Shares of Larsen and Toubro Monday declined up to 0.3 per cent after market regulator Sebi denied permission for its Rs 9,000 crore share buyback plan.
On the BSE, shares of the company fell 0.31 per cent to Rs 1,314.20. Intra-day it touched a low of Rs 1,275, a loss of 3.28 per cent.
Similarly, at the NSE the stock slipped 0.25 per cent to close the counter at Rs 1,314.60. During the day, it was trading 3.37 per cent lower at Rs 1,273.45.
On the volume front, over 4 lakh shares were traded on the BSE, while more than 88 lakh scrips changed hands on the NSE.
In a regulatory filing to stock exchanges, L&T Saturday said Securities and Exchange Board of India (Sebi) has asked it not to proceed with the buyback.
"Since the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements", the buyback offer is not in compliance with the Companies Act and Sebi norms, the regulator said in a letter to the company.
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"We estimate that the scrapping of the buyback could impact our return on equity (ROE) estimates by 150-165 basis point over FY20/21F," Japanese brokerage major Nomura said in a research note.
L&T had proposed to buy back up to 6.1 crore shares from shareholders at a price of Rs 1,475 per equity share, aggregating to Rs 9,000 crore. The offer was open to those holding equity shares as on October 15.
A buyback reduces the number of shares available in the open market.