Infosys stock takes center stage as IT major plans to buy back shares today

Buyback of Infosys shares

Informing Indian stock exchanges of the proposed share buyback, Infosys Ltd said: “Following our letter dated September 16, 2022, regarding the notice of meeting of the Board of Directors (“Board”) of Infosys Limited ( “Company”)), we would like to inform you that under Regulation 29(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”), the Board of Directors of the Company will consider a proposal to buy back fully paid shares of the Company at its meeting to be held on October 13, 2022, in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Rules 2018 ), as amended.”

According to stock market experts, the Infosys takeover move appears to be the effective use of cash reserves to increase shareholder returns. They said the move would support Infosys’ share price in the near term as macro uncertainties haunt positional investors more.

Infosys Takeover Today: Should You Participate?

Expecting to buy value in stocks ahead of Infosys’ takeover plan, Manoj Dalmia, Founder and Director of Proficient Equities, said: “Due to the buyout offer, some value buying is expected in Apart from that, due to macroeconomic uncertainties, more shares coming into the hands of the company will support the Infosys share price in the short term. Infosys, the offer is expected to come with an attractive premium, hence, one should participate in this Infosys buyout offer as one would get an instant premium from his investment.Apart from this, in the buyout offer, it is the company that pays the income tax and not the shareholders, so it is a good chance for the shareholders of the beaten IT stock to make money.

On the Infosys buyout move, Yes Securities said, “”Infosys is expected to announce a cash buyout of approximately ₹8,000 crore to ₹10,000 crore. As the outlook for revenue growth has moderated as customers have become cautious, this buyback is a better use of excess cash on the books. This should limit the decline in share prices in the short term. The repurchase price should be above CMP (current market price). In the current economic environment, it appears to be the effective use of cash reserves to drive shareholder returns.”

As of 2021, Infosys’ Board of Directors had approved up to ₹Buyback plan of 9,200 crores, which started on June 25, 2021. Indian regulations require a minimum period of one year between two buybacks.

Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.