CHENNAI: It giant Infosys, which has been riding out a storm over the past few weeks, said on Monday that some of its promoters would participate in the Rs 13,000-crore buyback offer approved by the firm’s board last week. Analysts say that while there might be marginal negative feeling arising out of the development, especially when the establishment is driving consolidation, too much should not be read into it.
The day also saw stock value get a much-needed boost after the return of Nandan Nilekani. The company’s stock closed the day up by 3.14 per cent to close at Rs 941.15 on the BSE and on the NSE, it gained 3.16 per cent to end at Rs 941. Infy’s market valuation has regained Rs 6,583.1 in value to stand at Rs 2,16,179.17 crore. However, the stock’s current value is still much below the Rs 1,150 price being offered by the company, at a premium of more than 22 per cent against price at the end of the trading day on Monday.
While analysts say this premium is quite attractive to participants and some promoters might want to raise some capital, the current context might put a small negative spin on sentiments. “Right now, there is no issue relating to percentage holding, no need for a showdown and some promoters might tender a few shares to raise money. Nandan’s return has changed the situation, there is no war and the company is now trying to consolidate. In this context, promoters selling shares might be seen with a very mild negative spin,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. “But, we should not read too much into it.”
Others agree. “Contrary to media reports, the promoters are not a monolithic block and not everyone backs Narayana Murthy in every issue. While there might not be open criticism, voting patterns over the last few quarters reflect disagreement in some issues. Now, if some promoters sell their stock, some might think it indicates a continuation of rifts in the ownership,” said a Mumbai-based analyst. The co-founders together hold 12.75 per cent in Infosys.
However, the buyback is subject to shareholders’ approval through a special resolution, and an announcement on the modalities such as process and timeline will be “released in due course”. The board, as constituted before the recent upheaval, approved the Rs 13,000-crore offer the day after former CEO Vishal Sikka resigned; the board lashed out at Murthy and market valuation tanked. While the last two weeks have seen a crisis situation, the return of co-founder Nilekani as non-executive chairman has stabilised things a bit.