Indus Towers Ltd. is set to consider a buyback of equity shares at its board meeting on July 30, along with the announcement of the financial results of the first quarter of fiscal 2025.
How Much Can Indus Towers Buy Back?
According to the Companies Act, 2013, a company can buy back up to 10% of the total paid-up equity share capital and free reserves without taking shareholders' approval. The total paid-up equity share capital and free reserves for Indus Towers are at Rs 27,038 crore as of March 31, 2024. Therefore, the company can buy back up to Rs 2,701 crore of shares without seeking shareholders' approval. The company currently has a cash balance of Rs 63 crore.
However, if the companies get shareholders' approval, a total of up to 25% of the total paid-up equity capital and free reserves can be bought back. This amounts to Rs 6,754 crore.
The buyback of more than 25% of the paid-up equity share capital is not allowed.
What Percentage Of Current Market Cap Can Be Bought Back?
Considering only board approval is taken, Indus Towers can buy back up to Rs 2,700 crore worth of shares from shareholders, which amounts to 2% of the current market capitalisation.
The company paid its dividend on May 13, 2022 and this will be the first buyback that the company will announce after the merger with Bharti Infratel.
Vodafone Idea Ltd. owes dues capped at Rs 6,500 crore to Indus Towers and this could likely be paid off after the company's recent FPO (follow-on public offer), preferential allotment and sale of stake in Indus Towers. This cash from Indus Towers could likely be used for the buyback from the shareholders.
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