After TCS, Infosys on Thursday reportedly said that it is actively mulling buyback and will kickstart the process soon. Sources told ET Now, “Size of Infosys buyback likely to be over $2.5 billion and the official buyback announcement will be likely in April”. Sources also revealed that Infosys founders have agreed on share buyback and they will not oppose it. “The board has given nod to adopt new Articles of Association to incorporate buyback,” they told the business news channel. Infosys – India’s second largest information technology services company – has cash worth Rs 38,000 crore on its books, which it may find difficult to deploy in an acquisition.
Hailing TCS buyback recently, TV Mohandas Pai said “I hope that Infosys follows suit and announces share buyback.” “If Cognizant and TCS can buyback shares, why not Infosys?” he added. Earlier last month, Infosys reported its consolidated net profit for the third quarter of the current financial year 2016-17 rose 2.3% on-quarter to Rs 37.08 billion, beating most analyst estimates and sending shares soaring. Its consolidated revenue for the Oct-Dec quarter was almost flat at Rs 172.73 billion, down 0.2% from the previous quarter.
Meanwhile, TCS India’s biggest software services exporter, last week approved share buyback plan of up to Rs 16,000 crore. Promoters of TCS currently holds 73.33% in the company. The buyback is 11% premium to the current market price. TCS in a stock exchange filing said that its board approved the buyback of up to 56.1 million shares, or 2.85 percent of its share capital, at Rs 2,850 each. The announcement comes within days of rival Cognizant unveiling its $3.4 billion buyback plan. The development comes at a time when Indian IT companies are under pressure to address shareholders’ concerns, including large amounts of unutilised cash on the books.
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The buyback is proposed to be made from the shareholders of the company on a proportionate basis under the tender offer route using the stock exchange mechanism, it added. The buyback is subject to approval of the members by means of a special resolution through a postal ballot, it said. The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the Buyback Regulations.