Infosys' First-Ever Buyback Fails To Lift Sentiment, Shares Slide 4%

Infosys' first-ever buyback of shares failed to lift investor sentiments despite India's No 2 IT services company setting the buyback price 25 per cent higher than Friday's closing price. Infosys shares fell as much as 4 per cent to a fresh 52-week low of Rs 882.55 today, extending the 10 per cent loss suffered on Friday. Infosys on Saturday announced a Rs 13,000 crore share buyback plan at a price of Rs 1,150 per share, which is at nearly 25 per cent premium to Friday's closing price of Rs 923.10. Infosys will buyback nearly 11.30 crore shares in this buyback offer, which is 4.92 per cent of its total shares available.

However, analysts believe the buyback to be a temporary relief for Infosys shares as uncertainty still looms over the appointment of new CEO after Vishal Sikka's abrupt exit on Friday. Sanjiv Bhasin, EVP-Markets & Corp Affairs at India Infoline, says the buyback is not likely to give a boost to Infosys share prices. Some foreign institutional investors may use the upside to sell the stock while domestic institutional investors may provide some support by buying at lower levels, he added.

Dr Sikka helped boost Infosys' revenue by about 25 per cent since taking over from SD Shibulal as CEO three years ago and reoriented the company to deal with a shift to internet and data-based computing. The reorientation of Infosys towards new age technology service provider may get affected after Dr Sikka's exit, say analysts. Technological changes like automation and a crackdown on visas in some countries have hurt the overall growth of Indian IT companies.

Some experts believe that looking for a replacement of Vishal Sikka will be a tough task for Infosys amid the ongoing battle between the tech giant's management and founders.

Mr Bhasin does not see much upside in the stock given the uncertainties surrounding the company after Vishal Sikka's exit. He suggests retail investors use the buyback opportunity to sell shares.

However, some analysts are optimistic that Infosys will be able to bounce-back soon. "While in near term it's (Dr Sikka's resignation) a setback for the company, but given the strength of the board of the company, we believe that the company will be overcome the setback," Sarabjit Kour Nangra, VP (Research- IT) at Angel Broking said.

As of 9.25 am, Infosys shares traded 2.21 per cent lower at Rs 902.70 compared to Friday's closing price of Rs 923.10. (With agency inputs)