Share markets in India are presently trading on a flat note ahead of June CPI inflation and factory data due later today.
The rupee is trading at Rs 68.56 against the US$.
In news from the textiles sector, KPR Mill share price is witnessing selling pressure today after the company withdrew its buyback proposal due to the tax proposed on buyback obligations in Budget 2019.
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The Secret Behind the Mind Numbing Success of Wipro, MRF and Titan
Wipro, MRF, and Titan are all well-known Indian companies from very different sectors.
But there is something about these companies that makes them very similar as well…
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We are going one step back…
You see, these companies share THREE UNIQUE TRAITS that are the true reason behind their massive success.
The reason why they converted ordinary investors into Crorepatis.
And we believe that looking for these same three unique traits in companies could help identify the next Wipro or MRF or Titan.
We know even the thought of finding such a company is extremely exciting.
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Yes, after years of research, we are ready to reveal details of a company that shares the same unique traits as Wipro, MRF and Titan…
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Shares of the company dipped around 6% in early trade today on back of the above news.
On April 18, 2019, the company had proposed and approved buyback of 3.8 million equity shares, representing 5.2% of the total share capital, at a price of Rs 702 per share for a consideration not exceeding Rs 2633.1 million.
In a press release, the company said, “we have today filed with markets regulator our communication conveying that the increase in the amount of buyback obligation due to the tax proposal in the Finance Bill 2019 was neither contemplated nor prevailing at the time of the consideration and the approvals of the board and shareholders”.
Last week, Finance Minister Nirmala Sitharaman proposed an additional tax of 20% in case of buyback with a view to discourage the practice of avoiding dividend distribution tax (DDT).
Note that the post-budget reaction saw a negative reaction from the market.
There was also debate around the tax for the super-rich which was increased. Also, for the market, buybacks will now be taxable which was also a surprise.
Before any for or against argument against the tax, it is important to understand how government earns its revenue.
Is this Budget A Step Towards India’s March to the Rs 5 Trillion Mark?
As can be seen in the chart above, corporate taxes contribute the major chunk to India’s revenues. This is followed by borrowings and GST.
Non-tax revenues currently contribute to 9% of overall revenues. Non-tax revenues include dividends that the government receives from PSUs or any other divestment that it does.
Girish Shetty shares some of his thoughts on this topic in the recent edition of The 5 Minute WrapUp. Here’s an excerpt from what he wrote…
- Focus on economic growth will mean revenue from corporate taxes will be an automatic by-product.
The modi government has reduced corporate tax rates to 25% for firms with turnover up to Rs 4 billion.
We believe many such measures are needed for India to become a Rs 5 trillion economy in the next 5 years.
Moving on to news from the IT sector, Tech Mahindra has entered into a strategic partnership with Rackspace, which will enable cross-selling to company’s customer base, joint product and services offerings, and improvements to Rackspace’s internal business applications and processes.
With this partnership, Rackspace will execute a new go-to-market commercial model and benefit from improvements and efficiencies to the management of business applications and processes.
To know more about the company, you can read Tech Mahindra’s 2018-19 Annual report analysis on our website.
Meanwhile, Quess Corp has received an approval to issue 7,54,437 equity shares of the company having a face value of Rs 10 per equity share to Amazon NV Investment Holdings LLC, a category III Foreign Portfolio Investor, for an aggregate amount of Rs 510 million at an issue price of Rs 676 by way of a preferential allotment.
The Board of the company in its meeting held today has approved the same.
In relation to the proposed investment in the company, the Board has also approved the execution by the company of the Share Subscription Agreement (SSA) for the proposed issue of equity shares on a preferential basis and the investment agreement with Amazon and Qdigi Services, a wholly owned subsidiary of the company.
To know what’s moving the Indian stock markets today, check out the most recent share market updates here.
This article (Indian Indices Trade Rangebound; Sun Pharma & Tata Steel Top Gainers) is authored by Equitymaster.