Tech Mahindra Buyback
Author: Pooja Jain Posted on 27 Feb 2019 15:50:03
The Board of Directors of Tech Mahindra Ltd. approved a share buyback for its investors on Feb 21, 2019. The details of the buyback include:
Ex-Date: March 5th, 2019
Record Date: March 6th, 2019
Buyback price: Rs. 950
Premium/Discount as per closing price on 21 Feb’19: +15.71% on Rs. 821
Buyback of shares: 2,05,85,000 equity shares (being 2.10% of the total paid-up equity capital of the Company)
Amount of Buyback: Rs. 1,956 crores (being less than 10% of the total paid-up equity capital and free reserves of the Company as on December 31, 2018)
*Shareholding Pattern: Promoters have 36% holding i.e. 35,26,93,512 equity shares and Indian Public shareholding in the company is 15.06% i.e. 14,75,66,335 shares.
*Shareholding with up to 500 shares: 3,25,52,944 shares representing 3.32% of total 97,97,33,808 shares.
The maximum no. of shares held to qualify as retail shareholder are 210 shares. Reserved shares for retail investors is 30,87,750 (i.e. 15% of 2,05,85,000). Assuming 100% application (which is 3.25 crore shares approx) would be accepted under retail category, the acceptance ratio comes out to be 9.48%.
Following are the dividends as provided by the company in the past 2 years:
|
Corporate Action
|
Price (Rs.)
|
Ex-Date
|
|
Dividend
|
14
|
26 Jul 2018
|
|
Dividend
|
9
|
27 Jul 2017
|
|
Special Dividend
|
6
|
28 Jul 2016
|
This is the first ever buyback by Tech Mahindra, following buybacks by its peers such as Infosys and TCS; where major IT companies are rewarding shareholders. Tech Mahindra, in particular, said that it intends to return excess cash to the shareholders in the form of buybacks and dividends.
The buyback represents management’s positive view for the underlying business in future and hopes to strengthen positive sentiment in the market. The company posted good results as of this quarter and we do not see any fundamental risk in the company at present. But lower acceptance ratio does not seem to present a good buyback opportunity here.
Note: Please do not consider this blog as a recommendation; it is purely for informative purpose only. The author(s) and Adroit research team may have some positions based on this analysis and may have recommended to clients. Please assume we are biased and do consult your financial advisor before taking any positions. There is no other relationship between the author(s) and Adroit research team; and the above company.
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*Source: Company Annual Report 2018