Information technology major Infosys has a share Buyback of up to Rs 9,200 crore at a maximum price of Rs 1,750 per share – a premium of 25 percent over Tuesday’s closing price.
The approval confirms the company’s third share buyback in the past five years. In 2017, the company carried out its first share buyback, returning Rs 13,000 to investors at Rs 1,150 per share. Infosys carried out its second buyback in 2019 at Rs 800 per share.
WHAT IS A BUYBACK?
A buyback is an option for promoters to buy back free float shares in a company. The company pays its shareholders a fixed value per share and, as part of its ownership, takes back shares that have been distributed to public and private investors.
It should be noted that the buyback is beneficial for investors as the company pays a higher price for shares than its market value.
There are several reasons companies choose buybacks, including plans to consolidate ownership, increase key financial metrics, and strengthen corporate finances.
Q4 RESULTS LIGHTER WEAKER
Infosys posted a 2.3 percent quarterly consolidated earnings decline to Rs 5.076 billion for the quarter ended March 2021. While performance was driven by poor margin performance, consolidated earnings were supported by strong sales growth.
Consolidated sales for the Bengaluru-based company rose 1.5 percent quarterly to Rs 26,311 billion. Infosys said, “Consolidated revenue in constant currencies increased 2 percent and revenue in US dollars was 2.8 percent quarter over quarter.”
US dollar revenue growth rose to $ 3,613 million in March 2021, compared to $ 3,516 million in the previous quarter.
Salil Parekh, CEO and MD of Infosys, said: “We passed a milestone of Rs 1.00,000 in sales in FY21. Our intense focus on customer relevance, the expansion of our digital portfolio with differentiated functions such as Infosys CobaltTM and the empowerment of employees have helped us to establish ourselves as the preferred partner of choice for our global customers. “
He added that strong momentum from FY21, along with focusing on the strategy to accelerate digital businesses, supported the company’s performance.
It should be noted that Infosys has held its revenue growth forecast for FY22 constant at 12-14 percent, while maintaining its full-year forecast EBIT margin growth of 22-24 percent.
The company’s operating income declined 2.3 percent to Rs 6,440 billion on a QoQ basis for the quarter ended March 2021. The company also confirmed that its margin declined 90 basis points sequentially for the quarter to 24.5 percent. It added that operating costs in the fourth quarter of FY 21 increased 5.7 percent from the previous quarter to Rs 2,707 billion.
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