(Bloomberg) -- Larsen & Toubro Ltd. will buy back as much as 100 billion rupees ($1.2 billion) of stock as India’s largest engineering conglomerate returns excess cash to shareholders.

The Mumbai-headquartered firm will buy the shares for as much as 3,000 rupees each through a tender offer, it said in a stock exchange filing Tuesday. That’s a 17% premium to Tuesday’s closing price. It will also pay a special dividend of 6 rupees a share.

The buyback is aimed at “improving return on equity for shareholders,” Chief Financial Officer R Shankar Raman said in a briefing. “These proposals underline the confidence of the company in achieving its growth plans and endorses the financial strength,” the firm said in an earlier statement.

Set up in 1938 by two Danish engineers, this is the first buyback announced by L&T since a previous attempt was halted in 2019 for flouting regulations. Larsen had about 243 billion rupees of cash at the end of March 31, with a gross debt-to-equity ratio of 0.25 times, according to its annual report.

Earlier in the day, the company reported a 46% gain in quarterly net income that beat analyst estimates. L&T’s management said India’s growth momentum is likely to continue and conditions are favorable for its capital spending cycle to sustain that momentum.

The conglomerate said focus will remain on cash generation and shrewd capital allocation. Raman said infrastructure business margins are likely to improve from the fourth quarter, with even healthier results in the following financial year.

--With assistance from Saket Sundria and Advait Palepu.

(Updates with CFO comments from third paragraph.)

©2023 Bloomberg L.P.