The share buyback, the first in the company's 36-year history, has been a long-standing demand by some of the founders and high-profile former executives.
A day after the abrupt exit of Vishal Sikka, Managing Director and Chief Executive Officer of Infosys, the company's Board on Saturday approved a proposal to buy back shares of up to Rs 13,000 crore at a 24.57 per cent premium.
It will buy back fully paid up equity shares of face value of Rs 5 each from shareholders, subject to shareholder approval by way of a special resolution, a company statement said. The Board of Directors cleared the proposal in a meeting held early on Saturday.
The share buyback, the first in the company's 36-year history, has been a long-standing demand by some of the founders and high-profile former executives.
The buyback price of Rs 1,150 per share is at a steep premium to the closing price of Rs 923.10 on Friday. The company's shares tanked 9.26 per cent on Friday, wiping out more than Rs 17,200 crore in market capitalisation. This was the stock's biggest single-day fall since April 12, 2013.
Analysts, however, say it is too early to downgrade the stock and that the fall is a short-term setback. Also, in April, the company had announced it would pay up to Rs 13,000 crore to shareholders during the current financial year through dividend and/or share buyback.
On Friday, Sikka — the first non-founder CEO of the IT major — quit after three years at the top, citing "unrelenting, baseless and increasingly personal attacks" against him.
The buyback of up to 11,30,43,478 crore shares comprises 4.92 per cent of the paid-up equity share.
"The buyback offer size is 20.51% of the paid-up capital and free reserves of the company as per the latest audited balance sheet as on 30 June, 2017," a company statement said.
Telling numbers
Infosys says it will buy back fully paid up equity shares of face value of Rs 5 each.
Buyback price of Rs 1,150 per share is at a steep premium to the closing price of Rs 923.10.
Infy’s shares tanked 9.26 per cent on Friday.
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