- More than 70 companies completed ₹354.6 billion of share buybacks in the first half of 2019
- The proposed tax may affect share purchases worth ₹100 billion that are in progress
The decision by India’s government to impose a tax on stock buybacks puts the brakes on what could have been another great year for share repurchases.
More than 70 companies, including software exporter Wipro Ltd., announced or completed ₹354.6 billion ($5.2 billion) of share buybacks in the first half of 2019, data compiled by Bloomberg show. That’s about two thirds of the ₹546 billion of such transactions for all of 2018, which was the most in at least six years, the data show.
“In the last three years, buybacks had supported the rally in stocks and helped improve the earnings per share for companies,” said Umesh Mehta, head of research at Samco Securities Ltd. in Mumbai. “That opportunity is now closed. Companies would now have to move back to distributing dividends, where the tax liability is lower.”
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Taxing Times
The proposed tax may affect share purchases worth ₹100 billion that are in progress. Infosys Ltd., India’s second-largest provider of IT services, has until Sept. 19 to complete buying back 82.6 billion rupees of its own stock, while Adani SEZ & Ports Ltd. is looking to repurchase shares worth 19.6 billion rupees, according to exchange filings.
Source: Livemint
