We are in the same boat: After TCS, big bro Infy may take buyback route too

The Infosys board is considering share buyback plan of USD 2.5 billion (Rs 1660 crore) in April 2017. Its competitor TCS has already announced a share buyback worth Rs 16,000 crore in the second week of February. Cognizant also came out with a buyback plan of USD 3.4 billion. Similarly, HCL Technologies is also exploring the possibility of a buyback.

Infosys’ buyback plan will represent 25 per cent of the paid-up equity capital and free reserves of the company. The company has a cash reserve of USD 5.25 billion. It is anticipated that the company’s buyback could be at a 20 per cent premium to the prevailing market price.

Generally, IT companies are cash-rich on their balance sheets. There are concerns that despite having ample amount of cash, the IT companies are struggling to invest in good ideas in a growth-challenged environment and, therefore, the buy-back plans.

The US has witnessed a staggering USD 1.5 trillion worth of buybacks from 370 of the S&P500 companies over the last three years.

The share price of Infosys increased 1.73 per cent and closed at Rs 1009.05 on Thursday.