IT services major Tech Mahindra on Thursday said that its board has approved a proposal to conduct its first ever buyback of shares worth upto Rs 1,956 crore at Rs 950 apiece, at a premium of 15.79 per cent over current trading price.
"The company's board has approved the proposal for buyback up to 2.05 crore equity shares from shareholders at a price of Rs 950 apiece. The total buyback size would be Rs 1,956 crore," Tech Mahindra said in a filing to the Bombay Stock Exchange.
"The board met this morning and the buyback was announced. Rewarding investors is always a key goal," Anand Mahindra, Chairman, Tech Mahindra tweeted following the announcement.
The company has fixed March 6 as the record date for the purpose of ascertaining the eligibility of shareholders to participate in the buyback.
"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, the agency reported.
"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 reportedly said.
In the exchange filing, the company said the details regarding the process, timelines and other statutory requirements would be made public on February 25.
According to latest data available with exchange, promoter and promoter group holds 35.9 per cent stake as on December 31, 2018.
Buybacks allows cash-rich IT companies to return excess fund to shareholders. Earlier this year, IT major Infosys announced a buyback offer of Rs 8,260 crore and Persistent Systems' board approved Rs 225 crore buyback programme.
Following the announcement, shares of the company closed 1.07 per cent higher at Rs 820.40, against a previous closing level of 811.75, on the Bombay Stock Exchange. During the day's trade, stock touched an intra-day high of 840.10 after opening at Rs 814.50.
Edited by Chitranjan Kumar