HCL Tech may consider buyback of shares

After subdued performance, IT companies are trying to give healthier, stronger returns to retail shareholders by various means, including buy-backs and dividends. After Tata Consultancy’s Rs16000-crore recent share buyback offer to its shareholders, HCL Technologies is likely to undertake similar exercise.

The management of HCL Technologies stated, “We keep looking at options to increase shareholders' value. We are open to share buyback. We will go to the board once we have decided on it."

The HCL Technologies board will have to get approval of shareholders for buyback proposal once it approves it.

HCL’s cash and cash equivalents stand at Rs. 2214.5 crore as on December 31 and fixed deposits stand at Rs.10,506.9 crore. The company has equity base of 1.41 billion shares and has paid dividends for the last 56 consecutive quarters.

In spite of having pressure on business growth, companies continue to generate cash flows year after year. The extra cash is used for buyback of shares as it will directly affect return ratios. which will ultimately indicate how efficiently a company utilizes its money.