In its regulatory filing, Infosys said, "the Board approved a proposal for the Company to buyback its own fully paid-up equity shares of the face value of ₹5 each from the equity shareholders of the Company (other than the promoters, the promoters group and persons in control of the Company), being 14.84% and 13.31% of its total paid-up capital and free reserves as on September 30, 2022 (on a standalone and consolidated basis, respectively) for an amount, payable in cash, aggregating up to ₹9,300 crore."
The buyback proposal is less than 15% of the aggregate of the total paid-up share capital and free reserves of the company as of September 30, 2022.
Infosys board has also approved a buyback price not exceeding ₹1,850 per equity share. This floor price is at a premium from the current market price.
On BSE, Infosys shares closed at ₹1,419.75 apiece down by 0.64%.
The buyback will be carried through the open market route. Also, Infosys has allowed American Depositary Shares (“ADS") to convert their ADS into equity shares and subsequently can sell such shares on the Indian exchanges during the buyback period.
Under the proposed buyback, the maximum number of shares to be bought back would be 50,270,270 equity shares. Notably, if the equity shares are bought back at the price below the maximum buyback price which is ₹1,850 apiece, then the actual number of equity shares bought back could exceed the maximum buy shares but will always be subject to the maximum buyback size of ₹9,300 crore.
As per the filing, Infosys shall utilise at least 50% of the amount earmarked as the maximum buyback size which is aggregated to ₹4,650 crore. Also, the company would purchase a minimum of 25,135,135 equity shares under the buyback.
As of September 30, 2022, Infosys promoter and promoter group (25 shareholders) hold 551,682,338 equity shares or 13.11% of Infosys. While Indian financial institutions/ banks/ mutual funds (58 shareholders) hold 642,817,041 equity shares or 15.27% in Infosys.
Further, FPIs or FIIs which have a total of 1,421 shareholders hold a 31.31% stake in the company, while ADRs (1 shareholder) hold 13.53%. NRIs (47,373 shareholders) and Foreign Nationals and Overseas Corporate Bodies (12 shareholders) hold 0.82% and 0.04% of the company. Lastly, Indian Public, corporates, and others (2,844,320 shareholders) hold a 25.92% stake in the company.
The buyback is subject to the approval of the members of Infosys by way of a special resolution and all other applicable statutory/ regulatory approvals.
As of September 30, 2022, Infosys has a free cash flow of ₹4,752 crore compared to ₹5,106 crore in Q1FY23. Further, its consolidated cash and investments stood at ₹38,921 crore in Q2FY23 against ₹34,854 crore in Q1FY22.
Apart from the buyback, the Infosys board also approved an interim dividend of ₹16.50 per equity share. The company has fixed October 28 as the record date for the dividend, while the payment date is set on November 10, 2022.
Earlier, for Infosys, Jefferies had said that the buyback is expected to support Infosys' share price amidst uncertain macro. Jefferies also highlighted that during previous buybacks, Infosys shares climbed by 12-21% from the announcement to the buyback's closure and outperformed Nifty IT on 2 of the past 3 occasions. Also, Infosys stock price had even reached the maximum buyback price during the previous two buybacks.
Last year, Infosys launched a share buyback plan worth ₹9,200 crore. The buyback commenced on June 25 and closed on September 14 of 2021.
