New Delhi, Jan 21 (PTI) Shares of Larsen and Toubro Monday slumped over 3 per cent in opening trade after market regulator Sebi denied permission for its Rs 9,000 crore share buyback offer. Also Read - Mahesh Babu's Produced Major To Release in Cinemas Worldwide This Sankranthi

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. Also Read - Pets Are Back! First Dogs Champ & Major Officially Move in to White House, Pictures Go Viral

“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. Also Read - Not Just His Dog, US President-Elect Joe Biden Will Bring His Cat to The White House Too

Reacting to the development shares of the company opened on a weak note at Rs 1,275, then fell further to Rs 1,275, down 3.28 per cent over its previous closing price.

“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.

The shares witnessed a similar trend on the NSE as well, where the stock opened at Rs 1,279, then touched a low of Rs 1,273.45, down 3.37 per cent over its last close.

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.

This is published unedited from the PTI feed.