HCL Tech to consider share buyback on March 20

IT services firm HCL Technologies is going to announce a buyback of shares. The firm will be second among the Indian IT services to consider buyback after Tata Consultancy Services (TCS).

The company on Wednesday announced that its Board of Directors will consider a share buyback proposal when they meet next week.

"A meeting of the Board of Directors of the company will be held on Monday, March 20, 2017, to consider a proposal for buyback of the equity shares of the company," said the company in a filing to BSE.

"In terms of the code of conduct to regulate, monitor and report trading by insiders of the company, the trading window for trading in the securities of the company, shall remain closed up to the close of business on Wednesday, March 22, 2017 for designated persons."

The Gurgaon-based IT services firms had a cash in hand worth Rs 1,596 crore (cash and cash equivalents minus borrowings) as on December 31, 2016. Market analysts say HCL has maintained a good track record in capital allocation. "This is a positive move looking at the sectoral growth. While the dividend payout ratios have been good, the company firm has been aggressive in acquisitions to develop new skills," said an analyst with a brokerage firm who did not want to be named.

The company's stock price closed 1.52 per cent or Rs 12.95 down to Rs 839.90 on the BSE on Wednesday.

TCS announced a buyback plan worth Rs 16,000 crore last month to repurchase 56.1 million shares (2.85 per cent of its equity) at Rs 2,850 each. This is the first buyback since the company listed and the biggest in Indian capital market.

Bengaluru-based Wipro had announced a buyback worth Rs 2,500 crore last year and the company chief strategy officer Rishad Premji recently said that the company might evaluate options of buyback and special dividends.

Infosys, which was questioned by shareholders for a better capital allocation plan, made changes in its article of association last month and may consider a share buyback soon.

It had around Rs 35,697 crore in cash as on December 31, 2016 and sources said that the company could return half of it to shareholders either through a buyback or dividend.

While Infosys saw a marginal increase over Q2 of the current fiscal, in the second quarter the company added a little over Rs 2,400 crore in it cash reserve with a 7 per cent sequential growth.