Infosys Announces Rs 9,300 Crore Share Buyback Offer, Should You Avail It?

Infosys board has approved a Rs 9,3000 crore share buyback offer at a premium up to Rs 1,850 per share, about 30 per cent higher than its current price, from the open market.

Infosys share price is currently Rs 1,422.

Sanjeev Hota, head of research at Sharekhan, said, “The buyback program was anticipated; we believe the buyback through (the) open market offer would support the stock performance amid global uncertainties and market volatility.”

The buyback offer size is 23.8 per cent of the total consolidated cash and investments and 43.8 per cent of the total revenue generated during the first two quarters of FY23. Infosys would buy 50,270,270 shares, around 1.19 per cent of the company’s paid-up capital as of September 30, 2022.

The number of purchased shares may exceed the maximum buyback shares if the stocks are purchased at a lower cost than the maximum price. The company must use at least 50 per cent of the amount designated as the maximum buyback size or Rs 4,650 crore. Hence, Infosys will buy a minimum of 25,135,135 shares based on the minimum buyback size and maximum buyback price.

Buyback History

It is the fourth buyback offer from the Bengaluru-based global IT giant in the last five years. Prior to this, Infosys offered buyback offers in 2021, 2019 and 2017. As per the Indian rules, a company must maintain a one-year gap between two buyback offers.

In September 2021, Infosys’ buyback size was Rs 9,200 crore, at Rs 1,750 per share, a 2.04 per cent premium on the market price. Similarly, in August 2019 and 2017, it offered a premium of 0.50 per cent and 3.09 per cent, respectively, to the market price during the buyback offers.

Should You Avail Of The Buyback Offer

Infosys is offering a premium of 30.09 per cent in the buyback offer. In the second quarter of 2023, Infosys’ revenue jumped 23.4 per cent YoY to Rs 36,538 crore in the Q2FY23. The net profit after interest is up 11.1 per cent to Rs 6,021 crore. The company also declared a dividend of Rs 16.50 for the quarter.