Tech giant Infosys limited’s board approves share buyback worth Rs 9,300 crore.

The company has also informed that it will be utilizing at least 50 percent of the amount of the maximum amount fixed for the buyback i.e. Rs 4,650 crore.

The Board of IT services bellwether, Infosys Limited on October 13, approved a share buyback program amounting to Rs 9,300 crore through the open market route. This is the fourth buyback announced by the company since its listing in 1993.

The maximum price set for this buyback is Rs 1,850 per equity share having face value of Rs 5 each and is subject to the approval of the members of the Company by way of a special resolution and all other applicable statutory/ regulatory approvals.

At the maximum buyback price, the possible maximum number of equity shares bought back would be 50,270,270 shares, which will comprise approximately 1.19 percent of the paid-up shares of the company as of September 30, 2022 (on a standalone basis). The company has also informed that it will be utilizing at least 50 percent of the amount of the maximum amount fixed for the buyback i.e. Rs 4,650 crore.

Infosys has allowed the holders of its American Depository Shares (ADS) to convert their ADS into equity shares and participate in the buyback if they intend to by opting to sell those shares on the Indian stock exchanges. Infosys’ cash and equivalents at the end of the June quarter stood at Rs 14,869 crores.

As a policy, Infosys returns 85 percent of its free cash flow to investors through dividends and share buybacks over a five-year period. A share buyback is seen as an alternative, tax-efficient way to return money to shareholders.

Amid growing concerns of a slowdown in major markets of the IT services industry, investment opportunities have become limited for the time being which has forced companies to find other avenues to reward shareholders, said the analysts tracking the company.

The last two buybacks done through the open market took around five months to complete. Experts are of the opinion that the share buyback should support the stock price amidst the prevailing uncertainty. Meanwhile, Infosys also reported a consolidated net profit of Rs 6,021 for the quarter ended September 30, 2022, up 11.1 percent from Rs 5,421 core reported in the same quarter of the previous year.