News By/Courtesy: Abhipsha Datta | 13 Apr 2021 0:17am IST

HIGHLIGHTS

  • Infosys disclosed its plans to buy back more shares with a proposal in this regard on the agenda at their board meeting to be held on 14 April 2021.
  • This buyback will be the third time the company has decided to buyback in less than a period of five years.
  • As reported by the Times of India, the size of the buyback this time could range between Rs 10,000-12,000 crore and could be between Rs 1,650-1,670 apiece.

Infosys on Sunday, dated 11 April 2021, disclosed its plans to buy back more shares with a proposal in this regard on the agenda at their board meeting to be held on 14 April 2021. This buyback will be the third time the company has decided to buy back in less than a period of five years. The board shall consider a proposal for buyback of fully paid-up equity shares at the board meeting on April 14, 2021, as per the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018. Buyback of shares can be explained as when shares of a company that can be publicly traded are bought back by the promoters, and the company offers a fixed amount per share to buy the shares back. This amount is usually greater than the prevailing market price. As reported by the Times of India, the size of the buyback this time could range between Rs 10,000-12,000 crore and could be between Rs 1,650-1,670 apiece. There are various reasons for Buybacks. The most important reason being, to reward the shareholder in case there is cash in the back but not projects to invest in. Other reasons may include ownership consolidation, making financial ratios look healthier, the stock is undervalued, etc. In most cases, Indian IT companies like Infosys, TCS, Wipro, and HCL Tech are dealing with billions of dollars in cash. As cash in the bank has a cost and hence is better to be returned to the shareholders, most of the IT companies are functioning on matured business models and there is hardly much to invest in, speaking in terms of new projects. A blog by Motilal Oswal stated that too much cash in the books and too few investment opportunities is considered a prime reason for the buyback of shares The Board of Infosys will conduct meetings on April 13-14 to approve its financial results for the fourth quarter and fiscal year 2020-21. The board will also suggest a final dividend for the financial year ending March 31, 2021. The IT giant made a maiden buyback of 11.3 crore equity shares in December 2017 for Rs 13,000 crore at Rs 1,150 per share. Infosys bought back shares for the second time in March 2019, buying 2.36% of the paid-up capital (103.25 million shares) worth Rs 8,260 crore at Rs 800 per share through the open market route. The company's blue-chip scrip of Rs 5 face value touched an all-time high of Rs 1,480 on 12 April 2021, before falling during the day amidst the market witnessing a sharp fall. 

 

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Section Editor: 5thVoice.News | 14 Apr 2021 7:21am IST


Tags : #Infosys

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