Last updated: 25 Jun, 2021 | 08:22 am
Overview on Infosys buyback
- India's second-largest IT company received a buyback approval from the board on April 14, 2021, and shareholders' nod on June 19, 2021, at the company's 40th AGM.
- The buyback is worth Rs 9,200 crore with a maximum price of Rs 1,750 per share.
- The buyback will start from June 25, Friday.
Buyback details
- The buyback will happen from the open market through the stock exchange route.
- The company has kept a six-month window for the buyback. It commences on June 25, 2021, and the last date is December 24, 2021. The company may complete the buyback before this period as well.
- As a part of the buyback programme, Infosys will repurchase a maximum of 5.25 crore shares, totalling to 1.23% of the paid-up equity share capital of the company as of March 31, 2021 (the number of shares here is at the maximum price i.e Rs 1,750).
- An important point in the buyback process is, the company will utilize at least 50% of the amount earmarked as the maximum buyback size for the buyback i.e. Rs 4,600 crore.
- The company will fund the implementation of the buyback from the free reserves the company holds or such other source.
- The proposal for the buyback offer received a 'yes' from 98.83 percent of investors, while 1.17 percent were against it.
INDmoney analysis
The share buyback is in-line with the company’s decision to return 85% of the free cash reserves over a period of five-years through a combination of dividends and share buyback to shareholders. Infosys said the Buyback is being undertaken by the Company after taking into account the strategic and operational cash needs in the medium term and for returning surplus funds to the members in an effective and efficient manner. However, do keep in mind that the shares are being bought back through the open market route, as against a tender offer. This means that Infosys will directly buy back the shares through the stock exchange route. The company will not be making any tender offer to shareholders for the same.
Outlook
At its recent AGM, the company had announced that it expects the revenue to grow 12-14 percent in constant currency, backed by good, broad-based demand across industries in FY22. Read highlights from AGM
The Covid-19 pandemic has forced a tectonic shift in business processes to move towards greater digitization. This has helped the IT sector to bounce back faster than other industries. Infosys said that the relevance of its offerings is resonating with its clients in these times. Infosys looks well-poised to expand its market share further in the upcoming quarters.