Birlasoft dips 11% in 2 days after stk turns ex-date for buyback, dividend

The board of Birlasoft, on May 23, 2022, had approved buyback of up to 7.8 million equity shares of Rs 2 each of the company at a price of Rs 500 per share through the tender offer

Shares of Birlasoft hit a 52-week low of Rs 307.60, declining 3 per cent on the BSE in Friday's intra-day trade. The stock of CK Birla Group software company has slipped 11 per cent in two days after it turned ex-date for share buyback on Thursday. The stock also turned ex-date for final dividend of Rs 3 per share yesterday.

The board of directors of Birlasoft, at their meeting held on May 23, 2022, had approved buyback of up to 7.8 million equity shares of Rs 2 each of the company at a price of Rs 500 per share through the tender offer.

The company had fixed Friday, July 15, 2022 as the record date for the purpose of determining the entitlement and names of equity shareholders who are eligible to participate in the buyback.

Birlasoft said the buyback would help the company to distribute surplus cash to its members holding equity shares, thereby enhancing the overall return for them. A buyback, generally, improves return on equity through distribution of cash and improve earnings per share by reduction in the equity base of the Company, thereby leading to long-term increase in shareholders' value.

Meanwhile, in the past three months, Birlasoft has underperformed the market by falling 32 per cent on disappointing earnings and concerns over weak outlook. In comparison the S&P BSE Sensex was down 8 per cent during the same period. The stock has nearly halved or is down 48 per cent from its 52-week high level of Rs 585.85, touched in January 2022.

"The headwinds in the form of geopolitical risks, high inflation, macroeconomic volatility, supply chain disruptions, and the after-effects of the pandemic will impact the growth in the financial year 2022-23. However, the solid underlying demand environment is likely to have a limited impact on IT services. Global organizations increasingly need digital information, technology, and IT transformation to grow and differentiate the business apart from running the day-today operations efficiently," Birlasoft said in FY22 annual report.

Nevertheless, the US economic growth is expected to slow down to 3.7 per cent and 2.3 per cent in 2022 and 2023, respectively, as per International Monetary Fund (IMF), which can pose some risks. Growth in Europe, including the UK, is likely to get impacted due to its energy dependence on Russia and disruption in the supply chain due to the war. As per IMF, the Euro area is expected to grow by 2.8 per cent and 2.3 per cent in 2022 and 2023, respectively, the company added.