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Infosys Buyback 2021

Established in 1981, Infosys is a NYSE listed global consulting and IT services company with more than 217,700 employees. From a capital of US$250, they have grown to become a US$11.31 billion (LTM Q2 FY19 revenues) company with a market capitalization of approximately US$ 44.4 billion.

In our journey of over 35 years, they have catalyzed some of the major changes that have led to India’s emergence as the global destination for software services talent. They pioneered the Global Delivery Model and became the first IT company from India to be listed on NASDAQ. The employee stock options program created some of India’s first salaried millionaires.

Infosys is a global leader in next-generation digital services and consulting. They enable clients in 45 countries to navigate their digital transformation.

They do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. They also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight.

They always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.

Buy Back Offer Deal:

Buyback Type:	Open Market
Buyback Offer Amount:	₹ 9200 Crores
Date of Board Meeting approving the proposal:	Apr 14 2021
Date of Public Announcement:	Apr 14 2021
Buyback Offer Size:	14.85%
Buyback Number of Shares:	NA
Price Type:	Open Market
FV:	5
Buyback Price:	₹ 1750 Per Equity Share

Details of Buyback:

The Board approved a proposal for the Company to buyback its own fully paid-up equity shares of face value of ₹ 5/- each (“Equity Shares”) from the equity shareholders of the Company (other than the promoters, the promoters group and persons in control of the Company), being 14.87% and 13.53% of its total paid-up capital and free reserves as on March 31, 2021 for an amount, payable in cash, aggregating up to ₹ 9,200 crore (“Maximum Buyback Size”) which is less than 15% of the aggregate of the total paid-up share capital and free reserves of the Company, based on the latest audited financial statements of the Company as at March 31, 2021 (on a standalone and consolidated basis), for a price not exceeding ₹ 1,750/- per Equity Share through the Open market route.

Salient financial parameters:

Particulars(in Crores)	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20
Sales	53,319	62,441	68,484	70,522	82,675	90,791
Expenses	38,436	45,362	49,880	51,700	62,505	68,524
Operating Profit	14,883	17,079	18,604	18,822	20,170	22,267
OPM %	28%	27%	27%	27%	24%	25%
Other Income	3,430	3,120	3,050	3,311	2,882	2,803
Interest	12	0	0	0	0	170
Depreciation	1,017	1,459	1,703	1,863	2,011	2,893
Profit before tax	17,284	18,740	19,951	20,270	21,041	22,007
Tax %	28%	28%	28%	21%	27%	24%
Net Profit	12,372	13,489	14,353	16,029	15,404	16,594
EPS in Rs	26.93	29.36	31.24	36.69	35.26	38.96

Source: Screener

How to Participate in buyback?

In this method of share Buyback, the company will be purchasing stocks from existing shareholders of the company directly from the market. Example: “Infosys Technology ” announces buyback plan of its shares up to value of Rs 1750, it means that the company will be purchasing shares of "Infosys Technology " from the open market at a price not exceeding Rs.1750 per share. Scenario 1- If the share price is below Rs. 1750 in that case, the company will put buy order at Current Market Price and purchase shares. Scenario 2- If the share price is above Rs. 1750, in that case, the company will put buy order at Rs. 1750 only and if someone is ready to sell at Rs.1750 or less then only company will get back shares.

Profit from the buyback on the bases of acceptance Ratio:

Not Applicable as it is Open Market Buyback

Recommendation:

As it is an Open Market Buyback, so no arbitrage available for investors. Only advantage is, the price will not fall much as company will buyback shares from the market. The open market will remain open for 6 months window between which company will buyback shares worth Rs. 9200 Crores.

34 Comments

If i place the order today will the company buy the shares today only or when they will buy?

I bought in April at 1440 and am exiting at 1750. one can make more money in open market unlike in tender route. there is no limit like a small investor in tender route.

You guys are looking at the smaller picture for temporary profits. after the buyback no. of shares outstanding will decrease and as per this news it will decrease by 14.85%. This decrease in the owners will lead to 14.85% less owners and more profit to share among them (if the ipo gets fully subscribed). Thus, the EPS will rise and it will lead to the rise in share prices and it’s a good business with excellent management which tends to keep buying back their shares at low prices in open market offers. Why would you want to sell such a good business for small profits in trading and paying small charges which bunch up to the substantial number at the end of year. Just we need to keep one thing in mind if the current earnings of the company justify its price, if the earning is low due to covid then maybe we can ignore it and buy it for longterm.

Welspun India board approved buyback of shares worth Rs. 200Cr. at a price of Rs. 120/- each.

Welspun ind. is proposing Buyback of shares, meeting to be held on 14th May.

Looking for more news about Buyback, Umesh ji!!

Since from 3 years they taking only open market only

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Co. Will buy back from open mkt for a price not exceeding 1750. Existing share holder may benefit if the market price exceeds to their purchase price. It will depend upon the time when buyback takes place .

I am holding 65
How much i will be eligible for buy back probably

What should be my strategy for next six months for Infy and TCS. Please advise Umesh sir

Edelweiss Wealth Research

*Infosys result- miss on all front and street will take this numbers negatively*

✅Revenue in CC Terms grew by 2%. QoQ and 9.6% YoY. Lower than our and street expectation

✅Reported topline came at $3,613 MN, a growth of 13% YoY. Digital business reported a YoY growth of 39% YoY.

✅Deal signs of $2.1 bn is inline with company average. But Lower than last quarter numbers.

✅EBIT Margin came at 24.5%. Which is 99 bps lower than last quarter.

✅Attrition went up sharply 15.2% from 10% last quarter and that is disappointing considering the strong show from TCS.

✅The revenue guidance of 12-14% was inline with expectations. But margin guidance of 22-24% is lower than FY21 reported numbers.

✅the company announced INR 9,200 cr @ INR 1,750 was in line with expectations

Our view:-
Infosys stock out performed TCS in recent times. But, the company in this quarter underperformed TCS on all parameters, like growth, deal sign, margin, attrition.

*The stock is expected to come under pressure tomorrow*

Dear sir,
I bought infy @ 1400. Shall I get some profit, once buyback starts?
What is the buyback start date?

Buyback offer size is mentioned as 14.85%. For 9200cr at 1750 per share, the no. of shares is about 5.3cr shares each with facevalue of Rs5, amount to 26.5cr. That is only 1.2% of current paid up equity. Can someone clarify please?

I have 10 share at RS 1365 what will be do after redult

Infosys dividend @ 15/- per shares
Buy back aggregating Rs 9200 crores up to a price of 1750/- from open. Market

What to do in this situation? Shall we get any benefit from this?

Though it is open market, specific investor benefit is not there. But as company will start buying shares from the market, share price will zoom. So, it is hold strategy to get benefit in long term.