Infosys Share Buyback: The share buyback of Infosys, the second largest information technology services company in the country, has arrived. Infosys’s 9200-crore shareback buyback offer has been approved by the board. Infosys will buy 5,25,71,428 equity shares at a price of Rs. 1750 under the share buyback program. The current price of the stock is around 1400 rupees. In this context, investors can get up to 25 per cent returns by participating in share buyback at the current price. During the announcement of the quarterly results on April 14, the company has also announced a share buyback.
Infosys third boyback
This is the third time Infosys is doing its share buyback. Earlier, Infosys had repurchased 11.05 crore shares worth Rs 8,260 crore in August 2019. The company’s first share buyback was worth Rs 13,000 crore in December 2017. In this, the company had bought 11.3 crore shares at a price of Rs 1,150 per equity.
What happens to share buyback
When a company buys its own shares from investors, it is called buyback. You can also consider it the reverse of an IPO. These shares cease to exist after the buyback process is completed. For buyback, mainly two methods – tender offer or open market are used.
Buyback effect on share
The buyback has an impact on the company and its stock in many ways. The number of shares of a company present for trading in the stock market decreases. This increases earnings per share (EPS). The PE of the stock also increases. This does not change the business of the company.
Why do companies buyback
The biggest reason for this is the excess cash in the company’s balance sheet. It is not considered good to have too much cash with the company. From this, it is believed that the company is not able to use its cash. The company uses its excess cash through share buybacks. Many times the company feels that its share price is low (undervalued), then it tries to increase it through buyback.
What is the process
First, the company’s board approves the proposal for share buyback. After this, the company announces the program for buyback. It mentions record date and buyback period. Record debt means that the investors who will hold the shares of the company till that day will be able to participate in the buyback. The buyback has an impact on the company and its stock in many ways. The number of shares of a company present for trading in the stock market decreases. This increases earnings per share (EPS). The PE of the stock also increases. This does not change the business of the company.
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