Infosys, India’s second largest IT company, had announced its fifth and largest ever Rs 18,000 crore share buyback on September 12. The record date for the same has been set for November 14, i.e. today. If you are an Infosys shareholders and keen to participate in the buyback, this needs to be an important date on your investment calendar. Wondering why?
The significance of the Infosys buyback record date is that investors who are keen to participate in this massive share buyback need to have the shares in their account today, November 14 (the record date set by the company). If someone buys the shares today, they won’t qualify for the buyback. This is because, as a result of the T+1 settlement, the shares bought on a particular day are not settled the same day. As a result of this, investors buying on the morning of the record date won’t have their names in the record list.
How to apply for Infosys share buyback
Here is a comprehensive guide for investors on everything they need to know about the buyback procedure and how to apply
Infosys share buyback- Understanding basics
The first and most important aspect to understand about the Infosys share buyback is why this matters. Typically a share buyback by a company means that the company will be buying its shares from current shareholders. There are many reasons why a firm may choose to do this. Some of the key factors are
-Signals strong conviction and confidence in the company’s future. Especially when the shares are bought at a premium, like in this case
-Return extra/surplus cash to shareholders and enhance shareholder value
-Boost the capital structure/earnings per share
Who is eligible for Infosys share buyback
The key question is who are eligible for this buyback. This is the reason that the record date is crucial. The shareholders who have the shares in their account on the record date become eligible for the buyback.
Infosys share buyback: How to apply
If you are keen about participating in the share buyback, here is a step-by-step guide:
#1 Attention to details: Carefully read the Letter of offer, to know details about the buyback window, size, price and entitlement
#2 Submitting tender: The next step is to log into your broker account and select buyback under corporate actions and choose Infosys Buyback. Based on your entitlement, you can decide the quantity or may oversubscribe too.
#3 Tender needs to be accepted: You must understand that not every tendered share will be accepted. Only 2.4% shares are being bought back. The shares that are going to be bought would be based on the acceptance ratio.
#4 Payment to be credited: Payment would be credited for the shares that are accepted. The shares that are not bought back are returned to the shareholder’s demat account.
Infosys share buyback: Tax implications
The next big question is, do these buybacks have tax implications? As per the new tax rules that came into force October 1, 2024, there is no tax levied on the company. The amount that the shareholders get is deemed the same as dividend and they need to pay tax as per the income tax slab they qualify for.
Infosys share buyback history
Just to remind our viewers, this is Infosys’ fifth and the largest share buyback by the tech bellwether. The company had earlier undertaken buybacks in 2017, 2019, 2021, and 2022-2023. Each of these have been at a premium ranging 18-30%.