HGS spurts as board to mull share buyback

Hinduja Global Solutions (HGS) climbed 7.61% to Rs 3055 after the company said its board will consider a share buyback on 14 January 2022.

A meeting of the board of directors of Hinduja Global Solutions will be held on 14 January 2022, to consider and explore quantum/timings of buy-back of equity shares of the company, HGS said in an exchange filing today.

The board will also consider potential mergers and acquisition opportunities, the company said.

On Friday, 7 January 2022, shares of HGS slumped 20% after the company declared Rs 150 dividend and 1:1 bonus issue, which left the investors disappointed. Shareholders were expecting a large dividend from HGS after it sold its health care business to Baring's private equity fund in August last year for $1.2 billion (Rs 8,000 crore).

HGS declared the third interim dividend of Rs 150 per share for the current financial year 2021-22. The company has fixed 18 January as the record date for the payment of this dividend.

Further, the company's board has also recommended issuing one bonus equity share for one equity share held (1:1).

Moreover, the board also approved to enhance the limits applicable for extending loans, making investments and providing guarantees or security upto Rs 3,500 crore. The proposal (under Section 186) is subject to the approval of the shareholders/ members and statutory/regulatory and other approvals, as may be necessary.

Last week, HGS said it completed the sale of its healthcare services business to wholly-owned subsidiaries of Betaine BV, funds affiliated with Baring Private Equity Asia (BPEA), one of the largest private alternative investment firms in Asia.

The transaction was based on an enterprise value of $1,200 million, subject to closing adjustments, and resulted in inflows of $1,088 million.

As part of the divestment, HGS has transferred all client contracts and assets, including infrastructure related to the healthcare services business, to the Buyer. As part of the transition services agreement, the new healthcare organization will operate under the name "HGS Healthcare" for a period of up to 12 months from closing.

Post completion of the transaction, HGS will have around 18,800 employees and 34 delivery centers in the US, Canada, UK, Jamaica, Philippines, and India. The company's revenue run rate for Q4 FY2022 post divestment would be approximately $105-$110 million per quarter.

HGS is a global leader in optimizing the customer experience lifecycle, digital transformation, and business process management. It combines automation, analytics, and artificial intelligence with deep domain expertise focusing on digital customer experiences, back-office processing, contact centers, and HRO solutions.

On a consolidated basis, net profit of HGS rose 67.51% to Rs 136.50 crore on 18.76% rise in net sales to Rs 1582.56 crore in Q2 September 2021 over Q2 September 2020.

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