BENGALURU: IT major Infosys, which will announce its second quarterly results on October 13, said it will consider a proposal for buyback of fully paid-up equity shares of the company at its meeting on Thursday. This will be the company’s fourth buyback in the last five years. Brokerages expect this buyback might come at over 25% premium.
Piyush Pandey, Lead Analyst - Institutional Equities, YES SECURITIES, said, “Revenue growth outlook has moderated as clients have become cautious, this buyback is better use of surplus cash lying on books. It should limit downside to stock price in the near term. The buyback price is expected to be at a significant premium to CMP.”
Recently, brokerage firm Jefferies in its Indian IT Q2 results preview said there might be potential buyback for Infosys. It expects the IT company to lead on growth among large-sized firms. In September 2021, the IT major completed its latest buyback of 55.8 million shares worth Rs 9,200 crore.
Its previous buybacks were in 2017 for Rs 13,000 crore and in 2019 for Rs 8,260 crore. In January this year, IT company TCS announced an Rs 18,000 crore buyback, and it completed its fourth buyback in five years. Infosys share fell 2.65% at at Rs 1,423.90 on the BSE on Tuesday.
Sanjeev Hota, Vice president, Head of Research at Sharekhan by BNP Paribas said over the years, Infosys is known for its generous capital allocation policy, it returns almost 85% of the free cashflows to its shareholders via buyback and dividends.
"Though we still have to wait for October 13, 2022, to get a fair idea on the quantum, premium and mode of the buyback plan, nevertheless, looking at its past track record of last two buyback programmes, the quantum should be close to Rs 10,000 crore and buyback price could be around 25-30% premium to current market price," he said.
He believes that the proposed buyback will happen through the open market operation similar to the last two buybacks. Further, the buyback would support the stock performance in near term, as the macro-overhang continues to weigh on the IT sector stock performance.
Infosys President Ravi Kumar S resigns
Infosys on Tuesday said its president Ravi Kumar S has resigned from his post. It didn’t give any reason for the move, which comes days ahead of its second-quarter earnings.“The board of directors placed on record their deep sense of appreciation for services rendered by Ravi Kumar S for his contributions to the company,” Infosys said in a regulatory filing. In his role as president, Ravi Kumar S led the Infosys Global Services Organisation across industry segments.