Tech Mahindra to buyback shares worth Rs 1,956 crore

Tech Mahindra Thursday announced a Rs 1,956-crore worth share buyback programme as the IT major looks to reward its shareholders. The company would be using a combination of buybacks and dividends to return capital to the shareholders, a senior official said.

Cash-laden Indian IT firms have been returning surplus cash to shareholders by way of dividends and buybacks.

The board of Tech Mahindra has approved a proposal for buyback of up to 2.05 crore equity shares from shareholders at a price of Rs 950 apiece. The total buyback size would Rs 1,956 crore, according to a regulatory filing.

The offer price is 15.7 per cent higher than Thursday's closing level of Rs 820.40 per share.

The record date for the purpose of ascertaining the eligibility of shareholders to participate in the buyback has been fixed as March 6.

"We evaluate the cash needs of the business from time to time and intend to return excess cash to shareholders. In terms of the method adopted, we will be using a combination of buybacks and dividends to return capital to reward our shareholders," Tech Mahindra CFO Manoj Bhat told PTI.

He also emphasised that the practice of share buybacks would be an ongoing one.

"We have traditionally used dividend payouts as the means to return capital back to shareholders. We have now additionally resorted to buyback as an efficient means to return surplus to shareholders," he said.

The details regarding the process, timelines and other statutory requirements would be made public on February 25.

Promoter and promoter group held 35.9 per cent stake in Tech Mahindra as on December 31, 2018, as per latest data available with stock exchanges.

Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, said Tech Mahindra plans to return around 22 per cent of its cash and cash equivalents to investors through the buyback programme.

"Tech Mahindra used to utilise its incremental cash generated by the business in acquisitions/ investments in the earlier years. Now the company has joined the league of the large peers that have opted for the share buyback route to boost the shareholders' returns," he said. 

Earlier this year, Infosys announced a buyback offer of Rs 8,260 crore and Persistent Systems' board cleared Rs 225 crore buyback programme.