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

Infosys on Saturday announced that it would buy back shares of up to Rs 13,000 crore, or 4.92 per cent, from investors at Rs 1,150 per share. The buyback price is a 24.5 per cent premium over Friday’s closing price of Rs 923.

The stock closed at Rs 976.8 on Wednesday. On Friday, with Chief Executive Officer Vishal Sikka announcing his decision to quit, the share value plunged 9.6 per cent.

“The buyback offer size is 20.51 per cent of the total paid-up equity capital... The buyback offer will comprise a purchase of up to about 113 million 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,” Infosys said in its filing to the BSE.

Infosys has been under pressure from investors to stop hoarding cash. The Bengaluru-based IT services major had cash reserves of Rs 39,335 crore on June 30. Even with the Rs 13,000-crore bounty for shareholders, Infosys will still have Rs 26,000 crore.

The IT services sector, which is facing its worst period in nearly a decade due to a shift to digital technology, has seen several companies pay back investors rather than hoard cash. Rivals TCS, Wipro and HCL Technologies have announced share buyback plans.

In February, US-based Cognizant said it would return $3.4 billion to shareholders after activist shareholder Elliott Management, which holds a 4 per cent stake in the company, exerted pressure on the company to take steps to boost shareholder value.These included returning cash, a shift in strategy and bringing in independent board members, which helped Cognizant to perform better in the second quarter.