Infosys fixes buyback record date; Promoters to sell 1.77 crore shares

Infosys' share price surged on Tuesday after the IT major fixed November 01, 2017 as record date for it's share buyback programme. 

Infosys said in the statement, "We wish to inform you that the buyback committee has approved and fixed Wednesday, November 01, 2017 to be the record date for determining the entitlement and the names of equity shareholders to whom the letter of offer will be sent and will be eligible to participate in the buyback."

Following which, the share price of Infosys gained by almost 2%. At 1407 hours, the company's stock was trading at Rs 936.45 per piece on BSE higher by Rs 13 or 1.39%. 

Kotak Mahindra Capital Company and JP Morgan India Private Limited are appointed as the managers of the buyback offer. 

According to Infosys, shareholders whose names appear on the Register of Members/List of Beneficial Owners as on November 01, 2017 - will be eligible to participate in the buyback offer. 

There are total 19 promoters including N R Narayana Murthy, Nandan Nilekani, S Gopalakrishnan, S D Shibulal and K Dinesh and their family members – together hold 12.75% stake in Infosys at the end of June, 2017. 

Remaining 86.76% of holding belongs to public and 0.49% to employee trust and 0.49% to non-promoter group.

Together these 19 promoters in Infosys have 29,28,06,199 equity shares - and have decided to  tender up to a maximum of 1,77,29,998 equity shares in the buyback. 

Total buyback offer consists of 11,30,43,478 equity shares fully paid-up having face value of Rs 5 each at a floor price of Rs 1,150 per piece. 

Maximum amount of funds required for the buyback will not exceed Rs 13,000 crore. 

Infosys said, "Offer Size is 20.51% of total fully paid-up share capital and free reserves of the company on a standalone basis, which is within the stipulated limit of 25% of the aggregate of the fully paid-up share capital and free reserves of the Company as on June 30, 2017."

From the buyback, Infosys will return surplus cash to its shareholders in proportion to their shareholding, thereby enhancing the overall return to shareholders.

Also, this will help Infosys to improve return on equity and Earnings Per Share by reducing the equity base. EPS of Infosys is currently at Rs 14.87. 

Liquid assets including cash and cash equivalents and investments of Infosys were Rs 39,335, crore as on June 30, 2017, rising compared to Rs 38,773 crore as on March 31, 2017.

ICICI Securities said, "Though shareholder value creation through a buyback is a step in the right direction, we would be closely watching the company’s revenue growth guidance of 6.5-8.5% (in constant currency terms) for FY18E in the midst of recent developments.

Apart from this, Infosys has also fixed November 01 for payment of interim dividend. The shareholders who will participate in buyback offer will be also eligible to receive interim dividend.