On Thursday (October 13), Infosys Ltd, India's second-largest IT services company, announced a share buyback worth Rs 9,300 crore, its fourth buyback in the last six years. What are the terms of the deal? The company has set the maximum buyback price at Rs 1,850, a premium of 30 per cent over the closing price on Thursday. The buyback of shares from shareholders will be carried through the open market route. Infosys has allowed American Depositary Shares (ADS) to be converted into equity shares, which can then be sold 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, which works out to 1.19 per cent of the capital. The company will utilize at least 50 per cent of the amount earmarked as the maximum buyback size for the buyback — Rs 4,650 crore. Based on the minimum buyback size and maximum buyback price, the company would purchase a minimum of 25,135,135 equity shares. Infosys had gone for a Rs 9,200 crore share buyback in 2021. TCS, India’s largest IT company, had unveiled a Rs 18,000 share buyback in March this year. How does it impact stocks, investors? Shares bought back by the company will be extinguished, leading to a higher earning per share. It will also boost the share price of the company as the reduction in the capital will lead to a fall in the equity capital. Infosys shares shot up by over 5 per cent with the shares last quoting at Rs 1492.50 per share on the BSE, a rise of 5.12 per cent, on Friday. Infosys shares had fallen by 23.60 per cent since January this year. Tech companies, which are sitting on a cash pile, usually prefer buybacks instead of bonus issues as the latter bloat the equity capital.
