Infosys board clears Rs 13,000-crore share buyback at Rs 1,150 apiece

Moving ahead with its much awaited buyback offer, India's second largest software company Infosys Technologies on Saturday announced that its board has approved a Rs 13,000-crore buyback plan.

In a filing to the stock exchanges, the company said it would buy back fully paid-up equity shares of face value of Rs 5 each at Rs 1,150 apiece. The buyback offer size is 20.51 per cent of the total paid-up equity capital of the company, the filing said.

The company said "The buyback offer will comprise a purchase of up to 113,043,478 equity shares aggregating up to 4.92 per cent of the paid-up equity share capital of the company at a price of Rs 1,150 per equity share."

The buyback price has been slabbed at a premium of 17.73 percent and 17.92 percent over the weighted average market price of the company stock on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) respectively as on August 16, 2017, which is the date of intimation to the stock exchanges on the proposed buyback, the company said.

The company said that holders of the company's American Depository Shares (ADS) may participate in the buyback if such ADS holders cancel their ADSs and withdraw the underlying equity shares to become equity shareholders of the company as on August 16, 2017.

The Infosys board has set up a buyback committee comprising Co-chairman Ravi Venkatesan, Executive Vice-Chairman Vishal Sikka, Interim CEO & MD U B Pravin Rao, CFO M D Ranganath, Deputy CFO Jayesh Sanghrajka, Inderpreet Sawhney and Company Secretary A G S Manikantha.

India's IT services sector has grown in single digits for the first time in a decade on account of growing automation and clients calling for a shift to digital technologies. This has led to IT company stocks exhibiting volatility of a high order and yielding sluggish returns for investors. The companies are keen to prevent by consolidating their stock holdings and employing their cash piles in buying back shares.

Infosys had in April proposed that it would pay up to Rs 13,000 crore to buy back equity shares. The Bengaluru-based IT services major reported cash and cash equivalents and investments worth Rs 39,335 crore on its balance sheet as on June 30, 2017, following which it proposed its first share buyback.

Foreign nationals, financial institutions and overseas corporates owned 54.54 percent of Infosys stock as of August 16, 2017. The promoter and promoter groups held 12.75 percent, while Indian financial institutions, banks and mutual funds held 9.63 percent equity in the company. The remainder of 23.08 percent is in the hands of Indian corporates and the public.

Indian IT companies TCS, Wipro and HCL Technologies have already announced their respective share buyback plans this year.

Following the departure of CEO and MD Vishal Sikka on Friday, share prices of Infosys Technologies were under pressure, and there have been apprehensions that the buyback may not evoke a good response. Following Sikka's shock exit, the stock was battered in early morning trade on the bourses on Friday. The stock closed down 9.60 percent at Rs 923.10 on the Bombay Stock Exchange, and 9.57 percent down to Rs 923.15 on the Nifty on Friday.