Infosys share buyback: Likely for $ 1.6 billion
The board at Infosys is likely to consider a proposal for an Infosys share buyback. This will be their second share buyback. The amount is speculated to be $ 1.6 billion. This will surely cheer up investor sentiments in which some founding family members could tender their shares.
Infosys is coming off a one-year moratorium for the share buyback that ends in December. Sources said that the buyback announcement could be part of the board resolution when it meets on January 11 to consider the audited quarterly financial result.
The company’s successive buyback, subject to shareholder approval, could be executed much faster this time around. That is because Infosys has voluntarily delisted its American depositary shares from the Euronext Paris and Euronext London exchanges in March. Moshe Katri, managing director, Equity Research Wedbush Securities said, recurring buybacks help reinforce investor confidence. “But given the uncertain times, (global macro headwinds, political instability) which historically impacted IT spending patterns, investors are likely to approach the IT service space more cautiously,” he said.
Sources said that the Infosys share buyback could happen at around 20-25 per cent premium to the prevailing market value. Infosys shares ended trading on Friday at Rs. 646 apiece on BSE. Share back, or higher dividends, usually suggests that the management feels the company is undervalued. The Infosys board had said that it will return approximately Rs 2600 crores ($ 400 million) through a special dividend of Rs. 10 per share. It also identified Rs. 10,400 crore ($ 1.6 billion) to be paid out to shareholders for the 2019 financial year in a manner decided the board subject to applicable laws and requisite approvals. Infosys returned one-third of cash to shareholders at Rs. 1150 apiece during the last financial year.
Last time, out of 19 members of the promoter group, only 16 tendered shares. Two of the co-founders didn’t even participate. But this Infosys share buyback might turn things around.
