Tech Mahindra, a leading IT company in the country, has announced that it will buy back shares at a sum of Rs.950 per share. This is a 14.59% premium above the current trading price, which is Rs.829 apiece. The proposal to buy back the shares has already been approved by Tech Mahindra’s board.
According to a regulatory filing, the company has proposed that it will buy back up to a total of 2.05 crore equity shares at Rs.950 apiece for a total amount of Rs.1,956 crore.
Tech Mahindra added that 6 March 2019 has been fixed as the record date to ascertain the eligibility of those shareholders who will take part in the buyback process.
The opening and closing dates for the buyback programme have not yet been announced by Tech Mahindra.
Mr. Manoj Bhat, the Chief Financial Officer of Tech Mahindra, said the cash needs of the company are evaluated from time-to-time, after which excess cash will be returned to shareholders. He added that the company will be using a combination of dividends and buybacks to return capital to the shareholders of the company. He said the practice of buying back shares will be an ongoing one.
As per Tech Mahindra’s exchange filling, the timelines, details regarding the buyback process, and other statutory requirements will be made public on 25 February 2019.
Buybacks give a way for cash-rich organisations to return additional funds to their shareholders. Earlier in the year, Infosys announced that it would buy back its shares for Rs.8,260 crore. Further, the board of Persistent Systems also approved a buyback programme of Rs.225 crore.
Sources: Business Today, The Times of India