NIIT Technologies surges 6% as board to mull share buyback plan

Shares of NIIT Technologies advanced 6 per cent to Rs 1,563 on the BSE on Tuesday after the company announced that its board will meet on December 23 to consider share buyback proposal. The stock of the IT consulting & services firm was trading close to its 52-week high level of Rs 1,638 touched on November 21, 2019.

In the past one-and-half years, big technology companies such as Infosys, Tata Consultancy Services (TCS), Wipro and HCL Technologies have preferred the buyback route to meet two purposes -- rewarding shareholders, and utilising free cash available.

NIIT Technologies is a debt-free (no long term borrowings) company, with cash and cash equivalents increased from Rs 806 crore a year ago to Rs 976 crore as on March 31, 2019. The company’s net worth stood at Rs 2,072 crore at the end of financial year 2018-19.

The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings (P/E) multiple.

In the past six weeks, NIIT Technologies has underperformed the market by falling 8 per cent. In comparison, the S&P BSE Sensex was up 1.6 per cent, while the sector index S&P BSE IT index down 1.6 per cent during the same period till yesterday.

At 11:41 am, the stock was trading 5.6 per cent higher at Rs 1,556 on the BSE, as against a 0.63 per cent rise in the benchmark index. The trading volumes on the counter nearly doubled with a combined 1.09 million equity shares changing hands on the NSE and BSE so far.

NIIT Tech to buy WHISHWORKS; sell 89% stake in Esri India for Rs 90 crore

Mid-sized IT services company NIIT Technologies said it will acquire Hyderabad-based WHISHWORKS IT Consulting, a move that will strengthen the former's digital capabilities.

NIIT Technologies also signed a definitive agreement for selling its entire 88.99 per cent stake in Esri India Technologies Ltd to Environmental Systems Research Institute, Inc (Esri, Inc).

The announcements come at a time when funds affiliated with Baring Private Equity Asia (BPEA) are buying about 30 per cent share in NIIT Technologies from NIIT Ltd and other promoter entities for about Rs 2,627 crore.

"WHISHWORKS IT Consulting is an IT services and consulting company specializing in MuleSoft and Big Data technologies, in which NIIT Technologies will acquire a 56.67 per cent stake initially, with the remaining equity to be acquired over the next two years through pay-outs linked to financial performance," NIIT Technologies said in a late night statement on Saturday.

The valuation of 100 per cent of the share capital has been determined at Rs 2.87 billion (Rs 287 crore), it added.

NIIT Technologies will make the acquisition in an all-cash transaction, funded through internal accruals.

WHISHWORKS has about 250 employees. Its revenue stood at Rs 991 million in FY2018.

In a separate filing, NIIT Technologies said it has signed a definitive agreement for selling its entire 88.99 per cent stake in Esri India Technologies Ltd to the existing equity shareholder Environmental Systems Research Institute, Inc (Esri, Inc).

"Total consideration on closing for 88.99 per cent stake of the company will be Rs 89.7 crore," it added.

Esri India Technologies works in the field of Geographic Information System (GIS) using the distributionship rights of Esri, Inc.