The board of HCL Technologies Ltd. approved the proposal to buy back shares worth up to Rs 4,000 crore to reward investors.
HCL Technologies will repurchase 3.6 crore shares, or 2.6 percent of the total paid-up equity, at Rs 1,100 apiece, the information technology company said in an exchange filing. That represents a 9.5 percent premium to Thursday’s closing price.
The buyback size of Rs 4,000 crore represents 14.83 percent of the fully paid-up equity share capital and 11.59 percent of the free reserves. The Shiv Nadar-led company's cash and cash equivalents stood at Rs 6,375 crore as of March 31, 2018, according to the filing.
The buyback price is in line with what brokerages had expected. Last year, the information technology company had offered a Rs 3,500-crore buyback, with a 17 percent premium on the then prevailing stock price.
The quantum of the buyback was slightly more than what we were expecting. We had expected around Rs 3,500 crore. The buyback price of Rs 1,100 apiece comes in line with our expectations. It is a good price [to tender shares] from a short-term perspective. I suggest investors hold on to the stock if they have a long-term view.Urmil Shah, Research Analyst at IDBI Capital
HCL Technologies’ offer comes a month after India’s largest IT company Tata Consultancy Services Ltd. declared a Rs 16,000-crore share buyback programme. TCS had announced the buyback at 15 percent premium to its share price on June 15.
Shares of HCL Technologies have risen 13 percent so far in 2018, compared to the 7.3 percent rise in the benchmark S&P BSE Sensex Index.