The board of Infosys Ltd. has approved a proposal to buy back equity shares worth Rs 9,200 crore, the company said in a stock exchange filing today. It also announced earnings for the quarter ended March and fiscal year 2021.
The Bengaluru-based software services major will repurchase 5.25 crore shares or 1.23% of the total paid-up capital, the filing said. The buyback will be done at a price of up to Rs 1,750 per share through the open market route. The maximum buyback price represents a 25.2% premium to Tuesday's closing price.
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This is the third buyback announced by the company in its history. The first was a tender offer announced in 2017, when the company bought back shares worth Rs 13,000 crore at Rs 1,150 per share. The second buyback was conducted in 2019 when the company bought back shares worth Rs 8,260 crore at an average price of Rs 747 per share.
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In an earlier note, broking firm Nomura estimated the company can buy back a maximum of $2.4 billion worth of shares, based on 25% of its net worth, without shareholder approval.
"We expect Infosys to announce a buyback in the range of $1.3-1.9 billion at a maximum price of Rs 1,650," Nomura's Rishit Parikh wrote in his note on April 12.
Infosys has a capital allocation policy to return 85% of its free cash flow over a block of five years through a combination of dividends and buybacks. Nomura reiterated Infosys to be its top pick within the tier-1 IT space.
Shares of Infosys ended 2% lower on Tuesday, Apr. 13 at Rs 1,397.1. That compares with the 1.4% gain seen on the Nifty 50 index. The stock fell for the second straight day. Wednesday is a trading holiday in India.
Correction: The language in this story has been clarified to specify that the buy back of shares will be via the open market and not a tender offer. The earlier sentence did not make that adequately clear.
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