Infy announces buyback worth Rs 13,000 cr at price of Rs 1,150 per share

Mangalore Today News Network

Bengaluru,  Aug 19 2017, DH News: The board of India’s second-largest IT company Infosys has approved buyback worth Rs 13,000 crore, at a premium of 19.08% and 18.70% over the weighted average market price on BSE and NSE respectively, on Saturday.

The board on Saturday approved the buyback offer to purchase 11,30,43,478 equity shares (4.92% of the paid up equity capital) at the rate of Rs 1,150 per share.

The buyback offers the premium of 19.08% and 18.70% over the weighted average market price over past three months on BSE and NSE respectively.

“The buyback offer size is 20.51% of the total paid-up equity capital and free reserves of the company, as per the latest audited balance sheet,” company said in a filing to BSE.

In the buyback, the ‘offer to sell’ for shareholders will be made through Tender Offer Documents to both equity shareholders as well as American Depository Services (ADS) holders.

The IT major, sitting on a pile of cash reserves, had said in its earnings statement for the quarter ended March that its board identified an amount of up to Rs 13,000 crore, or $2 billion, to be paid out to shareholders through dividend or share buyback in 2017-18, as per its Capital Allocation Policy.

Again, in July, the company CFO Ranganath D Mavinakere, committing to the policy, has blamed company’s global presence causing delays in the buyback. IT companies are facing heat for increasing the shareholder’s value.

Already this year, other big IT firms have also announced share buybacks. TCS, India’s largest IT company, this year completed a Rs. 16,000 crore share buyback, while Bengaluru-based Wipro announced a Rs. 11,000 crore share buyback last month.

A share buyback is a tax effective way to distribute accumulated cash to shareholders, aiding their return on investment.

Earlier, embroiled in the controversy, the company’s director, Kiran Mazumdar Shaw has told DH, “If we don’t find the kind of merger and acquisition opportunities that we are looking at, obviously we would look at the buyback of the shares. But please give us time, because not every company wants to do a share buyback.”

The company has cash and cash equivalent worth Rs 23,117 crore as on June 30, 2017, up 2.17% from Rs 22,625 crore in the preceding quarter.

Earlier on Friday, Infosys shares fell by 9.6% after its CEO and MD Vishal Sikka’s resignation.