Majesco on Tuesday declared a provisional dividend of 974 rupees per share. The dividend was slightly higher than the closing price of the previous day small-tech company, Rs 972. The high dividend paid follows the sale of the US arm, which accounted for most of its revenues and profits, to a private joint-stock company. Thoma Bravo earlier this year.
“This interim dividend is paid for in the amount of Rs 2,788.4 crore on a shareholder basis of Rs 28.577 crore. The balance sheet funds valued at Rs 103 crore will be distributed under the consent of regular and regular approvals,” the company said in a statement on ESB.
Majesco has also launched a share buyback program at Rs 631 crore, which will end before the end of this month.
Both the repurchase and the dividend are the ways to return the money it generated through the sale of an American arm.
“Majesco India owns a 74.07 percent stake in the U.S. entity. Therefore, based on the interest, the company will now receive $ 513.8 million in cash (Rs 3,853.3 crore). Assuming a capital duty, the company would receive $ 3,121.2 This, together with 23.5 crore in cash on the company’s balance sheet, (would imply) that the total cash with the company would be 3,144.7 crore, or 1,037 rupees per share, “ICICI Direct said in note in August.
The strong dividend has prompted many investors to buy Majesco’s shares. Shares of nearly 1,000 crore – more than a third of its market capitalization changed hands on Tuesday at the NSE and the BSE. The stock ended at 982 rupees per share, after touching a record high of 1,010 rupees.
Market observers said wealthy shareholders of the company could earn to avoid high tax spending on dividends.
As of April, dividends in excess of Rs 1 lakh in a financial year are taxed at the recipient according to their tax slabs. So for someone who falls into the highest tax layer, the tax expense – after including all taxes can reach 43 percent.
On the other hand, an existing shareholder selling in the market will be taxed either a 10 percent long-term capital gain or a 15 percent short-term capital gain.
“Once the company pays the dividend, there will be nothing left in the company. It has cash of about 103 crore and real estate of about 70 crore, going according to the annuity of 5 crore which it generates. It doesn’t make much sense to buy the shares. Tax could enter most dividend income for those in the higher tax strata, ”said SP Tulsian, founder of SP Tulsian.com, a stock market advisory firm.
Tulsian added that naive investors are buying shares indifferent to the dividend tax. He said a possible sale of existing shareholders will continue to weigh on the shares until the record dividend data, which is Dec. 25.
Some market players have said that some investors buy the shares to reserve an imaginary capital loss that can offset gains from capital gains made during the year.