Infosys on Wednesday said its Board has approved up to Rs 9,200-crore buyback plan, wherein the IT major will buy back shares at a maximum price of Rs 1,750 apiece.
The buyback is part of the Bengaluru-based company's capital return of Rs 15,600 crore, which also includes a final dividend of Rs 6,400 crore.
The shares will be bought back via the open market route through the Indian stock exchanges, a regulatory filing said on Wednesday.
From FY20, Infosys had enhanced its capital allocation plan and said it will return 85 per cent of free cash flow cumulatively over five years via buyback and dividends.
"We've declared Rs 6,400 crore of dividend and Rs 9,200 crore in the buyback. Our cumulative payout for FY21 and FY20, which are the first two years of the capital allocation policy, we would have paid out 83 per cent of the 85 per cent. So in that sense, I think this is completely in line with our policy and that's what the board also considered when deciding the amount of buyback," Infosys Chief Financial Officer Nilanjan Roy told reporters.
Trading was closed on Wednesday.
Shares of Infosys had closed at Rs 1,398.60 apiece on Tuesday, down 1.91 per cent on BSE. The buyback price offered is over 25 per cent higher than the last closing price.
Elaborating on capital allocation exercise, Infosys statement said for FY 21, its board has recommended a final dividend of Rs 15 per share, and that together with the interim dividend of Rs 12 per share already paid, the total dividend per share for FY21 will amount to Rs 27, which is a 54 per cent increase over FY20.
American Depositary Shares holders are permitted to convert their ADS into equity shares and subsequently opt to sell such equity shares on the Indian stock exchanges during the buyback period, the filing said.
"Subject to the market price of the equity shares being equal to or less than the maximum buyback price, the indicative maximum number of equity shares bought back would be 52,571,428 equity shares (maximum buyback shares), comprising approximately 1.23 per cent of the paid-up capital of the company as of March 31, 2021 (on a standalone basis)," it said.
Infosys will utilise at least 50 per cent of the amount earmarked as the maximum size for the buyback i.e. Rs 4,600 crore, and purchase a minimum of 26,285,714 equity shares.
The Board has constituted a buyback committee comprising Chief Operating Officer (UB Pravin Rao), Chief Financial Officer (Nilanjan Roy), Deputy Chief Financial Officer, General Counsel and Company Secretary.
The buyback is subject to the approval of the members of the company by way of a special resolution and all other applicable statutory/regulatory approvals.
The public announcement setting out the process, timelines and other statutory details of the buyback will be released in due course, the filing said.
In August 2019, Infosys had bought back 11.05 crore of shares under its Rs 8,260-crore buyback offer. It had completed its maiden buyback of Rs 13,000 crore in December 2017, comprising 11.3 crore equity shares at Rs 1,150 per share.
