The board of Tech Mahindra has approved a buyback of up to 2.05 crore shares worth Rs 1,956 crore at Rs 950 per share. The record date for the same is March 6, the company said in a release to exchanges.
Speaking on its first buyback, Manoj Bhat, CFO of Tech Mahindra, told CNBC-TV18 that the company will adopt a dividend plus buyback strategy. " "We will conduct buybacks on an annual basis as done by our peers in the industry. It is tax efficient and we do not want excess cash with the company," he said, adding that the IT major will still hold on to some cash for future acquisitions, as "this is a core feature of our growth strategy."
Bhat did not clarify whether promoters will participate in this process.
Also see: Why IT companies are taking share buyback route even as earnings are strong
A share buyback is a corporate action in which a company takes back shares from its shareholders at a price higher than the market price. In doing so, the number of outstanding shares in the market reduces. This allows companies to invest in themselves.
Cash-rich IT firms have been giving up excess cash to shareholders through dividend and share issues. Last month, Infosys announced a Rs 8,260 crore buyback and Persistent Systems’ board consented to a Rs 225 crore buyback plan.
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