Shares of Hinduja Global Solutions Ltd (HGS), the IT services arm of Hinduja group, dropped nearly 4% in intraday trade on Tuesday after the company announced buyback of 60 lakh shares worth ₹1,020 crore, which represents 11.43% of the company's total paid-up equity shares as of December 17, 2022. The floor price for the buyback is ₹1,700 per equity share, a premium of 21% from Monday’s closing price of ₹1,406 on the Bombay Stock Exchange (BSE).
Following the announcement, Hinduja Global share price opened a tad lower at ₹1,403.10, against the previous closing price of ₹1,405.95 on the BSE. Extending losses, the stock declined as much as 3.65% to hit an intraday low of ₹1,354.60, amid surge in volume trade. By 1:40 pm, 11,000 shares changed hands over the counter as compared to the two-week average volume of 4,857 stocks, while the market capitalisation slipped to ₹7,177.5 crore. The stock hit a 52-week high of ₹1,974 on January 4, 2022, while it touched a 52-week low of ₹847 on May 13, 2022.
“The board of directors of the company at its meeting on December 19, 2022 considered and approved the proposal for the buyback of fully paid up equity shares of the company only) having a face value of ₹10 each from all shareholders through the tender offer route,” HGS said in an exchange filing.
As per the filing, the board has approved the buyback price not exceeding ₹1,700 per equity share payable in cash, for an aggregate amount of up to ₹1,020 crore, excluding any expenses incurred or to be incurred for the buyback viz. brokerage, costs, fees, turnover charges, taxes such as buyback tax, securities transaction tax and goods and services tax (if any), stamp duty, advisors fees, filing fees, printing and dispatch expenses and other incidental and related expenses and charges.
"The indicative maximum number of equity shares to be bought back at the maximum buyback price subject to the buyback size are 60 lakh equity shares," it said.
However, the actual share repurchase may exceed the indicative maximum buyback shares if the floor price fixed by the board is less than the maximum buyback price, subject to the fact that 25% of the total number of equity shares in the paid-up equity share capital of the company cannot be bought back and the amount used cannot exceed the buyback size, it added. At the end of the September quarter, promoter group entities held 66.63% stake in the company, while public shareholders own 33.37% shares.
“The indicative maximum buyback shares represent 14.36% and 11.43% of the total paid up equity shares of the company as on September 30, 2022, and December 17, 2022, respectively,” as per the filing.
The buyback size represents 24.15% and 13.19% of the aggregate of the company’s paid-up equity share capital and free reserves as of September 30, 2022. The maximum buyback price represents premium of 28.99% and 29.09% over the closing price on the NSE and the BSE, respectively, as on December 13, 2022, being the day preceding the date when intimation for the board meeting was sent to exchanges, it said.
The board has also formed a ‘buyback committee’ for the proposed buyback, which will be headed by Narendra Singh, Company Secretary and Compliance Officer, as Compliance Officer.
In a separate development, the board of the company approved the appointment of Ashok P Hinduja as an Additional Director designated as (Chairman, Non-Executive Non-Independent Director) with effect from December 19, 2022. It has also appointed Munesh Khanna as an Additional Director designated as an Independent Director for a period of 5 years, effective from December 19.
