First buyback can bring cheer to L&T's shareholders, say analysts

Analysts say pricing is key to sustain interest in L&T stock

Buybacks are announced for a host of reasons, sometimes for the promoter to bump up his/her stake, or in lieu of a dividend or just to improve the return ratios. With Larsen & Toubro (L&T), analysts say, there could be more than one compelling reason behind the buyback plan.

For one, many are of the view that buyback may be an effective tool to increase the return profile. Analysts at CLSA estimate an 85 basis point increase in the company's return on equity (ROE) after the buyback. ROE, in fact, is already on a steep mend — thanks to L&T’s efforts