The board on July 12, 2018, has approved the Buy-back of up to 3.63 crore fully paid up equity shares of the Company at a price of 1,100.
The buyback is up to 4,000 crore which is 14.83% and 11.59%, of the fully paid-up equity share capital and free reserves (including securities premium account) as per the latest audited standalone and consolidated financial statements of the Company, respectively, for the financial year ended March 31, 2018.
Another IT company TCS has also announced buyback of 16,000 crore a month ago.
On Thursday, HCL Tech is closed at 1010 on the NSE Thursday. The buyback is at a premium of 8.9 percent to HCL Technologies’ closing price on Thursday.
Let’s assume you buy 180 shares of HCL Tech at 1000. So you invest 1,80,000.
In this scenario if there will be 40% acceptance then calculation of profit is mentioned below.
I am considering 5 Scenarios here. After buyback the HCL tech price is 900,950,1000,1050 or 1100.
In first scenario if HCL tech price after buyback is 900 and assuming 40% acceptance,then there will be 72 shares accepted out of 180 shares we bought.
So price of40% shares which accepted in buyback is 79200 (72*1100). Now after buyback share price is 900 so cost price of remaining 108 shares will be 97200 (108*900). Adding these two numbers we would get final amount that we earn from this transaction. Which is 176400 and we invested 180000.
So in this scenario we would have loss of 3600. Applying same method in second scenario when price of HCL Tech would be 950 after buyback, you have profit of 1800.
|After Buyback price of Share||900||950||1000||1050||1100|
|40% acceptance(72 out of 180)||79200||79200||79200||79200||79200|
|Amount of 108 Remaining Shares||97200||102600||108000||113400||118800|