Infosys share price hit a new 52-week high of Rs 1,480 apiece in opening deals on Monday, a day after the software services giant announced that it would consider a proposal to buyback shares at a board meeting scheduled for April 14. However, as the day progressed, Infosys stock came off from high and fell in red. “We expect Infosys to announce buyback in the range of US$1.2-1.6 billion at a price range of Rs 1,600-1,650,” Suyog Kulkarni, Senior Research Analyst, Reliance Securities, told Financial Express Online. The board of Infosys is scheduled to meet on April 13-14, 2021, to approve and take on record the audited consolidated financial results of the company and its subsidiaries for the quarter and year ended March 31, 2021.
Infosys’ third buyback in last five years
This would be the third buyback by Infosys in the last years. Infosys completed its first buyback of Rs 13,000 crore in December 2017, comprising 11.3 crore equity shares at a price of Rs 1,150 per share. In August 2019, it had bought back 11.05 crore shares under its Rs 8,260 crore buyback offer, at an average price of Rs 747.38 per equity share. “We believe Infosys can do a buyback of Rs 14,400 crore (20 per cent of net worth) which would be higher than their past buybacks (13 per cent of net worth in January 2019 and 18 per cent of net worth in August 2017),” analysts at Prabhudas Lilladher said. Analysts added that the maximum permissible size of the buyback is 25 per cent of net worth.
TCS, Wipro buybacks each since 2017
IT majors Tata Consultancy Services (TCS) and Wipro completed their buyback in January 2021. TCS repurchased shares worth Rs 16,000 crore, while Wipro’s offer size was Rs 9,500 crore. Wipro repurchased 32.3 crore equity shares; TCS, on the other hand, brought back 5.33 crore shares or 1.42 per cent of the paid-up capital. Since 2017, TCS has completed three buybacks while Wipro four. Wipro announced a share buyback of Rs 10,500 crore to repurchase 32.3 crore equity shares at a price of Rs 325 per equity share in April 2019. It also brought back Rs 2,500 crore worth of shares in 2016 and Rs 11,000 crore worth of shares in 2017. Similarly, in 2017, TCS announced the Rs 16,000 crore share buyback plan at a price of Rs 2,850 per share. However, in 2018, TCS brought back 7.61 crore equity shares at a price of Rs 2,100 apiece.
At 11.15 AM, Infosys shares were trading 0.61 per cent down at Rs 1,432 apiece. In comparison, BSE Sensex was trading 1,369 points or 2.76 per cent lower at 48,222. Analysts said even as Infosys stock price is moving higher, charts suggest an overbought condition. “Investors should look to buy only near support at 1380-1400 zone & avoid buying at current levels,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online. So far in the trade, a total of 4.86 shares have exchanged hands on BSE, while 1.06 crore shares have traded on NSE.
(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)