INFOSYS BUYBACK 2022: KEY DETAILS TO KNOW FOR INVESTORS

What is a Share Buyback?

A Share Buyback (also known as Share Repurchase) is when a company buys back its own outstanding shares from stakeholders to reduce number of stocks accessible in open market which is also an alternative to return money to investors.

Companies buy back stocks to increase the demand in the market, thereby inflating the stock value, Earning Per Share (EPS) and ROE of the company. A Stock buy-back is a sign the investors can use to make informed decision as it shows that the business has sufficient cash set aside for emergencies and the possibility of economic trouble is less.

Is Infosys Buyback 2022 good or bad?

The Infosys Buyback 2022 offers an opportunity for the shareholders to exit their positions at a premium price. In case you stay invested you would have an increased percentage of shareholding in the company and improved earnings per share. Thus, one should understand the company fundamentals along with one's need, goals, and risk appetite to decide if one wants to stay invested or participate in the buyback offer.

How to participate in the Infosys Buyback 2022?

Since the buyback is of the Open market there is no special participation required. Any equity shareholder holding the shares in Demat form can participate in the buyback offer through their stockbroker.

The shareholder needs to inform their broker on the details of the Equity shares they wish to sell. The broker will place a sell order whenever the company places a buy order for the buyback. The trade would get executed at the offer price or lesser only when the price offered by the shareholder matches with the buy order placed by the company.

Infosys Buyback (2022)

Infosys has announced a ₹ 9,300 crore share buyback - fourth such activity by India's second-largest IT company in the last 5 year. The table given below highlights the key details regarding the buyback.

The company has stated that it will buy back 50,270,270 (around 5 crore) equity shares comprising approximately 1.19 per cent of the paid-up capital of the company as of September 30, 2022 (on a standalone basis). However, the number of equity shares bought back could exceed the maximum buy shares in case the shares are bought back at the price below the floor price - which is Rs 1,850

In the first share buyback or share repurchase of Rs 13,000 crore was announced in December 2017 through the tender offer route. For the offer, the buyback price was kept at Rs 1,150 per share.
 
Subsequently, the cash-rich IT company announced Rs 8,260 crore share buyback in 2019 through the open market route. The buyback price for the same was fixed at Rs 747.38 apiece.

Last, the company announced to buy back shares worth Rs 9,200 crore through the open market route at a price of Rs 1648.53

The current buyback is to be executed via open offer, wherein the company buys from market on a daily basis over a maximum period of six months. Past two buybacks were completed within 2.5-5 months.

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

A key point to be noted is 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.

Snapshot of the past buybacks from Infosys

Stock performance before and after buyback

Few Important Points:

1. If you have Infosys in MTF(Margin Trading Facility), then you would need to take Delivery of these shares (CTD) such that on ex-date shares are available in your Demat A/C.

2. If you are using SAM (Shares as Margin) in Infosys, then you would have to de-pledge them so that on ex-date these shares are available in your Demat A/C.

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code: 07730), BSE Ltd (Member Code: 103) and Member of Multi Commodity Exchange of India Ltd.(Member Code:  56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Margin Trading is offered as subject to the provisions of SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017 and the terms and conditions mentioned in rights and obligations statement issued by I-Sec. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. The contents herein mentioned are solely for informational and educational purpose.