Infosys hits new high as buyback via open route commences on Friday

Topics Infosys  | Buzzing stocks | Markets

Shares of Infosys hit a new high of Rs 1,539.90, up 2.5 per cent on the BSE in intra-day trade on Thursday after the information technology (IT) major announced that its Rs 9,200 crore buyback via open route will commence on Friday, June 25, 2021.

In the past one month, Infosys has outperformed the market by surging 14 per cent, as compared to 4 per cent rise in the S&P BSE Sensex. A sharp run-up in stock price has seen Infosys' market capitalisation cross Rs 6.5 trillion. At 11.00 am, the market-capitalisation of Infosys stood at Rs 6.56 trillion on the BSE, the exchange data shows.

Infosys has proposed to buy back shares at a maximum price of Rs 1,750 per share. The company had announced its intention of a share buyback during its Q4FY21 results.

The Board approval for the buyback was issued on April 14, and shareholder approval was received on April 19, at the company’s 40th Annual General Meeting (AGM).

The share buyback is in accordance with the company board's decision to return 85 per cent of the free cash reserves over a period of five-years through a combination of dividends and share buyback to shareholders.

Infosys said the Buyback is being undertaken by the Company after taking into account the strategic and operational cash needs in the medium term and for returning surplus funds to the members in an effective and efficient manner.

The Buyback will help the Company to return surplus cash to its members. The Buyback is generally expected to improve return on equity through distribution of cash and improve earnings per share by reduction in the equity base in the long term, thereby leading to long-term increase in members’ value; and the Buyback gives an option to the members of the Company, either to sell their equity shares and receive cash or not to sell their equity shares and get a resultant increase in their percentage shareholding in the Company post the Buyback, without additional investment.

In a public announcement, Infosys said it shall utilise at least 50 per cent of the amount earmarked as the maximum buyback size for the buyback i.e. Rs 4,600 crore. Based on the minimum buyback size and the maximum buyback price, the company will purchase an indicative minimum of 26.29 million equity shares.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel