I think , when ever dividend is declared by board , it will start trading above 1000 rs price, lets wait for last week of December or early january
Company announced the buyback price as Rs.845 and maximum number of equity share to be bought back is 7470540 which is 24.78% of the total paid-up capital of the share. But now the share is trading at Rs.935. So how will the buyback happen in such a low price?
Promoters will tender full 25%
Buyback does not attract tax in the hands of shareholders, but if you sell in the market, most shareholders will have to pay ST / LT capital gains tax (unless someone’s income is below the exemption limit)
Company is paying ~23% tax for buyback. If it was delisted, then STCG ~17% OR LTCG 0-11% would have been paid by shareholders. The latter would have been better taxwise.
Since dividends is taxed at marginal tax rates, it is beneficial for pass through entities like MF, not so much for individuals, HNIs and even promoters.
I still don’t understand the rational for coming up with current distribution plan.
Majesco fixes 25 dec as record date for dividend
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Is it worth retaining stock for investment after dividend payout
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Beware of below tax laws:
Tax as per slab on dividend:
Dividend is taxable as per your tax slab. Even if your slab is lower, review below:
TDS on dividend:
Effective April 1, 2020, as per the Income Tax Act,1961, the dividend income is taxable in the hands of shareholders. Accordingly, if any resident individual shareholder is in receipt of dividend exceeding Rs. 5,000 in a fiscal year, entire dividend will be subject to TDS @ 7.5%. The rate of 7.5% is applicable provided the shareholder has updated his/her Permanent Account Number (PAN) with the depository/ Registrar and Transfer Agent (RTA). Otherwise the TDS rate will be 20%.
If the dividend to a resident individual shareholder does not exceed Rs 5,000 in a fiscal year, no TDS is applicable.
If the resident individual shareholder provides declaration in Form 15G/ Form 15H, no TDS is applicable. Forms are available in Annexure – 1 (Form 15G) and Annexure – 2 (Form 15H)
No dividend stripping:
Section 94(7) of the Income Tax Act provides that only so much of loss is available for set-off or carry forward, which exceeds the amount of dividend earned on the shares/units linked to share of a company. In effect, for example the taxpayer would have incurred a loss of Rs. 150 by virtue of sale and purchase of shares (Rs.1000-Rs.850= Rs.150), however by virtue of section 94(7), only Rs. 50 (Rs.150-Rs.100) would be available as loss for set off and carry forward purposes.
Section 94(7) is only applicable when investor, who buys securities within the 3 months prior to the record date and sells such securities, within 3 months after such date in case of shares and within 9 months in case of units. In such cases, the capital loss arising to the shareholder to the extent of such dividend income shall be ignored i.e. the loss would not be available for set off against capital gain income.
Important dates:
Dividend = 974 per share for which the record dates are as follows.
Ex-Dividend Date 23-Dec 20
Record Date for Dividend 25-Dec-20
Earliest Dividend Payout 30-Dec-20
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I have few doubts with respect to the recent interim dividend announcement made by the company.
- As per the balance sheet of September 2020, company has got reserves of Rs.3088 crores. What is the logic behind distributing 2788.4 crores to shareholders through this interim dividend at Rs.974/ share. (Is the company going to be wound up?)
2.As per the announcement made to stock exchanges, ex date of dividend is 23.12.2020. Whether exchange will suspend trading in this company to adjust the dividend in stock price?
Awaiting views of learned members.
I think the company is closing operations hence the buyback and dividend to return cash to investors.
I have done workings for any arbitrage gain possibility on interim dividend of Rs.974/ share announced by company today. Awaiting views from learned members.
If u are in the highest tax bracket- U need to have a view on where will the price end up. and u sell before it goes ex dividend.
Here’s how it stacks up IMO.
Dividend declared 974.
Dividend to be paid later ~35
Real estate value 30 (numbers floating around have been 30-50. Have taken 30 as a placeholder)
Effective price per share 1040.
Now- even if u apply some discount- the price should be 1010-1020 atleast before it goes ex dividend. (this effectively means zero value for real estate)
So- lets say u are willing to sell at 1010- who will buy ? Answer is institutions/arbitrage funds. For them they can buy at 1010, pocket the dividend of 1010+ get some value of real estate and make a couple of percentage points in a very short period. There is no tax complication for them as tax is borne by the unit holders. So for them its more mathematical that they pocket the dividend, retain residual value and when they finally close their position and distribute proceeds- tax paid by unit holders on the net gain.
The only question is- how long will it take for them to be able to pay the additional 35 rs dividend.
Would be great if we get some views from people who understand Companies Act.
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How stock price adjusted to ex dividend = 200?
It is my assumption. Some of the experts are of the view that it may even quote at Rs.20.
Stock price reduces by dividend amount on ex date. In that case it could trade in single digit.
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I think, the company sold out, and will stop trading soon. The sale proceedings are being distributed to investors. Don’t understand why we still discussing about it. No point of buying now, as you’ll get back same amount and attract tax towards dividend. If it’s true the company will be delisted soon, moderators can close this thread.
I see many wondering how stock falls after paying dividend .
Suppose a company worth 100 cr market cap ( having 10 cr share each worth 10 rs) and if you take 50 cr out of it to pay dividend , the current value will be reduced by 50 cr. So each stock value will be reduced to 5 rs.
So after every dividend payments, money is taken out and the value of the company reduces and the share price will be automatically adjusted, if the company has potential to grow further, it’ll recover and move up. In majesco case no further growth, it’ll trade as per remaining property value. Which is around 100 cr I guess.
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