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IT giant Infosys’s board on Thursday approved a proposed share buyback worth Rs 18,000 crore.
The buyback — approved at Rs 1,800 per share — will be at a premium of 19.2 per cent over the current market price and comprise 2.41 per cent of the IT major’s equity.
This marks the software exporter’s first share buyback in more than two years.
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Earlier on Thursday, Infosys shares ended 1.5 per cent lower at Rs 1,509.5 apiece on BSE.
Infosys board approves first buyback in over 2 years
Infosys completed its last share buyback in February 2023.
That repurchase was worth Rs 9,300 crore at Rs 1,850 apiece, marking a premium of 30 per cent over the market price.
It opened on December 7, 2022, and closed on February 13, 2023.
Under the buyback, the company repurchased about 6.04 crore of its shares, representing about 1.44 per cent of its total equity.
Infosys has rewarded investors handsomely in the past
The Bengaluru-headquartered IT major has had a history of shareholder rewards, with a mix of dividends and bonuses every few months.
The company pays dividends regularly, with both interim and final dividends announced nearly every six months.
What is a buyback? Why do companies repurchase their shares?
A share buyback — also known as a share repurchase in market parlance — occurs when a listed company purchases its own shares either from the market or directly from investors.
A share buyback reduces the total number of shares in circulation in the market.
Typically, a share buyback is offered at a premium to the market price, and tends to lift the company’s earnings per share (EPS).
Companies opt for buybacks for a variety of reasons. A buyback not only sends a message to investors that the company strongly believes that its stock is undervalued, but also enables the company to reward their shareholders in a more tax-efficient way than dividends.
It also lets companies improve important financial metrics such as EPS, return on equity (ROE), and return on capital (RoC).
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