Should You Buy Majesco Shares for the Rs 974 Dividend Per Share? By

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By Aditya Raghunath — Insurance technology dividend firm Majesco Ltd (NS:) announced a dividend of Rs 974 per share, that’s a dividend payout of almost 19,500%. This came after the company confirmed that it would sell its US subsidiary to private equity player Thomas Bravo.

“This interim dividend payout translates to an amount of Rs 2,788.4 crore on a shareholder base of 28.577 million shares. The balance cash reserves estimated at Rs 103 crore will be distributed subject to board and regulatory approvals,” the company said in a BSE notification.

Majesco has also launched a Rs 631 crore buyback program to return value to its shareholders. This is good news for existing investors but new investors should be wary of buying Majesco shares. The US arm was responsible for a large part of the company’s revenues and profits.

When a company opts to give back most of its gains to its shareholders instead of expanding its business, it might not be the right time to buy shares in it. Prudent investors might wait for further clarity on business moves before making a call on buying shares. After the dividend payout, the company will only have Rs 103 crore as cash and real estate of Rs 70 crore.

The stock closed at Rs 982.2 on December 15.

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