Home Markets Mindtree announces total dividend of Rs 27 amid L&Ts takeover bid

Mindtree announces total dividend of Rs 27 amid L&Ts takeover bid

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Facing hostile takeover bid by Larsen & Toubro (L&T), midcap IT firm Mindtree on Wednesday announced a total dividend of Rs 27 per share.

The board of directors today declared an interim dividend of Rs 3 per share on the face value of Rs 10 each. The company fixed April 27 as record date for payment of the interim dividend.

Mindtree also recommended a final dividend of Rs 4 per share for financial year ended March 31 and a special dividend of Rs 20 per share (200 per cent face value of Rs 10) to celebrate the twin achievements of exceeding $1 billion annual revenue milestone in a fiscal and 20th anniversary of the company.

The final dividend and the special dividend are payable subject to the approval of shareholders.

“Mindtree has delivered exceptional performance for both the fourth quarter and the full fiscal year as we cross the historic $1 billion milestone. Over the course of two decades our strategy of being expertise-led and backed by a unique culture continues to help us attract world class people and create customer successes,” Mindtree CEO and Managing Director Rostow Ravanan said.

He added the company is “well-poised to continue delivering industry leading returns for all our stakeholders, the best is yet to come.”

Mindtree's FY19 profit increased 32.2 per cent to Rs 754.1 crore, while revenue was up 28.5 per cent to Rs 7,021.5 crore from the previous fiscal.

For the quarter ended March 31, the IT firm reported 8.89 per cent YoY rise in consolidated profit at Rs 198.40 crore. It had posted a net profit of Rs 182.20 crore in the corresponding quarter last year. The figure jumped by 3.77 per cent on a quarter-on-quarter basis.

“This (dividend payout) is a defence tactic, which it has adopted to reduce the attractiveness for L&Ts takeover offer. We take this as a negative in mid- to long-term. This indicates that even post takeover the current promoters and management are not going to be easy to convince that buyout has been done in good faith. The cash of company reduces by Rs 440 crore, which would reduce the annual earnings by Rs 30-35 crore, which is 5 per cent of net profit. However, on Thursday we will see a gap-up opening in the stock,” said Sameer Kalra – Equity Research AnalystRead More – Source