Mindtree wants to rain dividends to entice shareholders

The software company reported 18 per cent YoY revenue growth and crossed US$1 billion in annual revenue. To celebrate the same, the company's board has recommended a special dividend of Rs. 20 per share.

Earlier, the company's board approved an interim dividend of 30 per cent, that is, Rs. 3 per equity share of the face value of Rs. 10. The record date for which is April 27, 2019.

In addition to this, the board has recommended a final dividend of 40 per cent, that is, Rs. 4 per share and a special dividend of 200 per cent, that is, Rs. 20 per equity share, which it states is to celebrate the milestone of exceeding US$1 billion in annual revenue in FY19. These two dividends are subject to the shareholders' approval.

However, the debate is on as to whether a company can dole out special dividend when it is battling a takeover bid? Engineering major L&T acquired 20.32 per cent stake in Mindtree from promoter VG Siddhartha and Coffee Day Enterprises in March. Following this stake purchase, it expressed its intent to take over the software company which was condemned by the top management of Mindtree. According to SEBI's regulations, on March 26, L&T made an open offer to acquire over 5.13 crore shares, that is 31 per cent stake of Mindtree, for Rs. 980 per share. The open offer starts from May 14 to May 27.

Meanwhile, the company reported Q4 results for the March quarter of FY19 registering a revenue growth of 2.9 per cent QoQ and 25.6 per cent YoY at Rs. 18,394 million. The company's profit for Q4 was at Rs. 1,984 million, a growth of 3.8 per cent QoQ and 8.9 per cent YoY.

On Tuesday, the stock of Mindtree Limited closed at Rs. 972.15 per share, down by Rs. 5.90 or 0.60 per cent on BSE.