The board of Infosys, India's second largest software exporter, on Saturday, approved a Rs. 13,000-crore share buyback plan, the first since the company’s inception 36 years ago.
“Approved a proposal for the company to buy back its fully paid-up equity shares of face value of Rs. 5 each, from the equity shareholders of the company as on a record date to be announced later, for an amount not exceeding Rs. 13,000 crore,” according to a filing on the BSE.
The buyback offer size amounts to 20.51% of the total paid-up equity capital and free reserves of the company and will comprise of the purchase of 113,043,478 shares aggregating up to 4.92% of the paid-up equity capital of the company at a price of Rs.1,150 per equity share, according to the filing.
The buyback plan was announced in April. The company then had decided to pay out Rs.13,000 crore to shareholders through dividends or buy back shares by using 70% of its free cash flows. Various approvals from exchanges in both the U.S and India has led to the delay.
The company has $6.1 billion worth of liquid cash at hand, Vishal Sikka, who resigned as the firm’s CEO and managing director had said on August 18.
The buyback price represents a premium of 19.08% and an 18.7% over the volume weighted average market price of the equity shares on BSE and NSE during the three months preceding the date of intimation to the stock exchanges of the board meeting, according to the filing.
The board also took note of a premium of 17.73% and 17.92% over the closing price of the equity share on BSE and NSE respectively as on August 16, the date of intimation to the exchanges of the board meeting.
Mr. Sikka’s exit may have cost Infosys’ shareholders a whopping ₹22,520 crore on Friday after shares of the Bengaluru-based firm plunged 9.6% to ₹923.10. This was the stock’s biggest single-day fall since April 12, 2013. Analysts said that it was too early to downgrade the stock.
