Indian IT Firms Prefer Buybacks Over Dividends
Sushovan Nayak of Anand Rathi Institutional told ET Now that India’s leading IT services firms will likely continue favoring share buybacks over higher dividends after Union Budget tax changes. He said treating buybacks as capital gains—taxed at 12.5% or 20% depending on holding period—and buyback norms effective April 1 improves post-tax outcomes, making buybacks attractive for cash-rich firms such as Wipro, LTIM, TCS, Infosys and HCLTech.
Key Points
- 1Treat buybacks as capital gains, taxed at 12.5% or 20%.
- 2Show improved post-tax returns, making buybacks more efficient for minority shareholders.
- 3Advise practitioners to expect more buybacks among cash-rich firms like Wipro, LTIM, TCS.
Scoring Rationale
Industry-level tax change raises buyback attractiveness, but assessment relies mainly on one analyst's commentary rather than broad data.
Sources
Public references used for this report.
Practice interview problems based on real data
1,625 SQL & Python problems across 15 industry datasets — the exact type of data you work with.
Try 250 free problems
