HCL Technologies board to consider buyback on Monday

The board of HCL Technologies, the country’s fourth-largest information technology company, will meet on March 20 to consider a stock buyback.

The company is joining the trend set by IT companies, such as TCS and Cognizant, taking to this route to make use of the huge cash pile lying idle with it.

“A meeting of the board of directors of the company will be held on Monday... to consider a proposal for buyback of the equity shares of the company,” HCL Technologies said in a filing to the BSE.

In terms of the code of conduct to regulate, monitor and report trading by insiders (Insider Trading Code) of the company, the trading window for trading in the securities of the company, will remain closed up to close of business on March 22, for designated persons, it added in the filing.

As of December 31, 2016, HCL Tech had ₹2,214.5 crore in cash and cash equivalents on its books.

Cognizant had announced a $3.4-billion share buyback, bowing to pressure from activist investor Elliott Management Corp last month. TCS followed suit with a ₹16,000-crore buyback offer, the largest in Indian corporate history.

TCS had ₹43,169 crore in cash reserves, while Infosys had liquid assets, including cash and cash equivalents and investments worth ₹35,697 crore at the end of December 2016.

According to analysts tracking the industry, IT companies have been under increased pressure from investors to utilise the cash pile on their books, either in the form of share buybacks or generous dividend payouts.

Typically, share buybacks improve earnings per share while returning the surplus cash to shareholders, both of which support the share price of the company during sluggish periods.

Infosys too, has been under pressure to make a similar offer, but it is yet to make any such announcement.

However, it had sought shareholders’ approval to change the company’s Articles of Association to include a provision for buyback.

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