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Why buybacks are not favoured by top Indian IT firms

SEBI made changes to the buyback norms, dividend distribution tax is up 20% making it inefficient

Buybacks draw firms as taxes squeeze dividends

The top four IT services firms are sitting on a total cash pile of $15.5 billion as of  September 30, 2016 making several analyst believe that companies should look at the buyback programme to return cash to shareholders. These companies are sitting on cash piles despite giving away regular dividends and in some cases investing a significant amount in acquisitions.  With the business model churning free cash, the situation would be similar across the sector. According to a report by Kotak Institutional Equities, tier-I IT players pay out 40-50 per cent of net ...