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.

30 Comments

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

    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?

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

        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.

          Not sure. Buyers assigned by the company, slowly pace it to avoid spiking up the price.

      As a retail shareholders /investor we will not get any extra benefit as there is no specific quota for any specific category of investors

    It’s confirmed 9200cr worth buyback at 1750 per share via open market route..

    Last time Infy buyback was from Open Market, hence aggressive purchasing should be avoid until picture is not clear.

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