On this podcast, we take a look at some of the biggest stories that made the most noise in India Inc.
Harish Puppala | Rakesh Sharma
The sun has set on Dalal Street for the day. On this podcast, we take a look at some of the biggest stories that made the most noise in India Inc. Why stop at one story when we can have several. This is Stories of the Day, with me Rakesh Sharma on Moneycontrol.
- Wipro approves Rs 10,500 crore buyback at Rs 325/share
The board of Software services exporter and IT major Wipro Limited approved today the buyback of up to 32.3 crore shares worth around 10,500 crores.
The company’s board okayed a proposal to buy back up to 32,30,76,923 equity shares being 5.35% of the total paid-up equity share capital, at a price of Rs 325 per share, the company said in a release to the stock exchange. The buyback is at a premium of 15.4% to its closing price of Rs 281.6 on the NSE on April 16.
Wipro reported a 38% rise in fourth-quarter profit, helped by a strong performance from its banking, financial services and insurance segment. Net profit rose to ₹2,484 crore in the three months to March 31, from ₹1,803 crore in the same period a year earlier. Revenue from its IT services business grew 11.1%, driving total revenue to Rs 15,038 crore.
Wipro, of course, is not the first IT major to take the buyback route. In recent times, TCS, Cognizant, HCL, Infosys and Mindtree had announced share buybacks. Earlier this year, Infosys had approved an ₹8,260-crore share buyback. TCS had carried out a ₹16,000 crore share buyback last year. According to a report in Livemint, share buybacks improve earnings per share and return surplus cash to shareholders while also supporting share price during periods of sluggish market conditions. Wipro had previously conducted a buyback in November 2017 for shares worth Rs 11,000 crore at Rs 320 per share.
As per SEBI guidelines, a company can buy back its shares only once in 12 months. The rules state that a company is not allowed to make any buyback offers within a period of one year from the date of expiry of buyback period of the preceding buyback offer if any.
2) Naresh Goyal opts out from bidding for ailing Jet Airways
Sources told Moneycontrol today that Jet Airways founder Naresh Goyal has decided not to bid for acquiring stake in the cash-strapped airline. The full service carrier is currently operating less than 10 aircraft.
On April 12, sources claimed Goyal had also put in a bid for the carrier. Now, airline sources said Goyal has withdrawn the bid for the airline. Another report in Livemint, citing regulatory documents, claimed Goyal was planning a bid for Jet Airways as early as January. Jetair Pvt. Ltd, a Goyal-owned company that is a general sales agent (GSA) to Jet Airways, agreed to provide the airline ₹250 crore as loan collateral, and considered investing in the airline at an extraordinary general meeting (EGM) on 14 January.
In March, Naresh Goyal, and his wife Anita Goyal, had famously stepped down from the board of the airline which is Rs 8,000 crore in the red.
SBI Capital Markets has the mandate for Jet Airways' sale on behalf of the SBI-led consortium of the domestic lenders to Jet.
Meanwhile, Livemint reported that the management of Jet Airways has proposed a temporary shutdown of the struggling airline as it awaits promised funds from banks in a rescue deal. Over and above its bank borrowings, Jet also owes money to its lessors, staff and others, and has been struggling for weeks. It did not receive a stop-gap loan of about $217 million from its lenders as part of a bailout plan agreed in late March.
Earlier today, Jet Airways shares fell as much as 18.3% to their lowest level since August 2015 following reports of the temporary shutdown.
3) Aviation regulator DGCA said it will continue to monitor airfare movements on a daily basis and engage with airlines for appropriate action, according to a senior official who spoke to The Economic Times.
With Jet Airways drastically curtailing operations, there has been an adverse impact on the number of flights being operated on various routes. The official said that with concerns rising over higher air ticket prices, the Directorate General of Civil Aviation today held a meeting with representatives of airlines. Various airlines were advised to continue to monitor at their level and provide information to the DGCA to keep fares low as far as possible, he noted.
According to ET, the official explained, “Airlines representative also intimated DGCA that they have removed the few Higher Buckets from sale and offering tickets to passengers in lower fare buckets. DGCA will continue to monitor fare movement on daily basis and engage with airline for appropriate action.”Livemint reported that the DGCA wants to ensure the liquidity crunch that curtailed the operations of Jet Airways does not turn into an industry-wide crisis. Airline representatives told the regulator they had shifted seat inventory from higher priced buckets to lower ones.
- Polycab makes a blockbuster debut
Making a Hrithik Roshanesque market debut, shares of Polycab India closed Tuesday's session at Rs 655, up 21.75 per cent with respect to its issue price of Rs 538 per share. The scrip got listed at Rs 633 on BSE, a 17.66 per cent premium over the issue price. At the issue price, the largest manufacturer of wires and cables in terms of revenues demanded 21.6 times FY18 earnings. Peers Finolex Cables trades at 22.08 times and KEI Industries at 19.63 times FY18 earnings.
The Rs 1,345 crore IPO, which was sold between April 5 and April 9, was subscribed 52 times. This was the largest response to an IPO since HDFC AMC’s 82.99 times subscription last year.
Polycab manufactures and sells a diverse range of wires and cables and its key products in the wires and cables segment are power cables, control cables, instrumentation cables, solar cables, building wires and flexible cables.Our own Sunil Shankar Matkar spoke to a number of analysts about the prospects of Polycab, and they all seem to indicate that the stock has legs, and is a good ‘un considering the diversified business and strong fundamentals.