Infosys Can Buy Back Its Own Shares To Make Shareholders Wealthy: Expected Date?

Infosys could conduct a share buyback of upto Rs 12k crore; final decision to be made after April 14.
Infosys could conduct a share buyback of upto Rs 12k crore; final decision to be made after April 14.

Reporting its best sequential growth in a period of nearly nine years, Infosys recorded a growth of 5.3% in the quarter ending December (Q3). 

Consequently, the board of the IT major Infosys is considering a proposal for share buyback, in its upcoming board meeting on April 14, Wednesday.

“The Board of the Company will consider a proposal for buyback of fully paid-up equity shares of the Company at its meeting to be held on April 14, 2021,” stated the company in a regulatory filing.

Sources have reported that the estimated size of the buyback can range from Rs 10,000 to Rs 12,000 crore. The complete details related to the anticipated buyback is presented here.

Will Infosys’ 3rd Buyback in 5 Years Take Form?

Infosys’ stocks traded at Rs 637/share on April 13, 2020, as the Covid-19 pandemic had just hit the world economy terribly.

On Friday, April 9, 2021, the stock prices for the Bengaluru-based IT major closed at Rs 1441 at the BSE. In a period of only a year’s time, Infosys’ stock has surged by a record 126%.

As a result of the company’s exceptional profit growth and sales recorded in the quarter ending December, Infosys is considering proposing a share buyback, at its board meeting scheduled on Wednesday.

As per TOI, the size of the buyback could range from Rs 10,000-12,000 crore, at a price of Rs 1,650-1,670 a piece.

Furthermore, if this buyback comes under effect, it will be Infosys’ third share buyback in less than 5 years.

  • In 2017-18, Infosys returned 1/3rd of its cash, or Rs 13,000 to its shareholders, priced at Rs 1,150/piece,
  • In 2019, the size of the buyback was Rs 8,260 crore, priced at Rs 800/ piece.

Also, as per the data provided by BSE, Infosys has paid back two dividends in the last one year.

Infy: 4th Most Valued Company on Friday

Share buyback is the re-acquisition by a company of its own shares. It represents a more flexible way of returning money to shareholders.

Over the last 4 years, IT companies have increased the payout ratio to their shareholders, in the form of dividends and buyback combinedly, as opposed to majorly dividends earlier.

Infosys’ balance sheet has shown consolidated cash and current investments worth Rs 33,157 crore, as of December 2020.

On a YoY basis, profit growth is seen around 15-22% for the quarter on a 12-14% rise in sales, states ET.

As the market closed on Friday, Infosys recorded a market cap of over Rs 6.1 lakh crore, making it the 4th most valued company in the country, after Reliance Industries, TCS and HDFC Bank.

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