Infosys announced on Sunday that its Board of Directors will consider a proposal for the buyback of fully paid-up equity shares of the company at its meeting on April 14, 2021. This will be the company's third stock repurchase. Following the meeting, the company will release its results on April 14 and declare the final dividend for the previous fiscal year.
When a company buys back its own shares from investors, it is known as a share buyback or share repurchase. It can be viewed as a tax-efficient alternative to returning money to shareholders.
"The Board of the Company will consider a proposal for buyback of fully paid-up equity shares of the Company at its meeting to be held on April 14, 2021, in accordance with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018," the company said in a regulatory filing.
From April 12, Indian IT companies will begin reporting their financial results for the fourth quarter and fiscal year FY21. The first company to report financial results will be Tata Consultancy Services (TCS).
Besides that, Infosys increased its total market valuation to 6,13,854.71 crore last week, thanks to a major contribution from IT giants such as Wipro.
Infosys had $4.5 billion in cash and investments at the end of Q3 FY21. Despite paying a $687 million half-yearly dividend during this period, the company's cash and investments remained strong, according to the company's quarterly report.
Repurchasing shares can be done for a variety of reasons, but the most common reason is that a company's stock is undervalued and it wants to increase demand. Share buybacks reduce the number of shares in circulation, increasing the value of the stock and earnings per share (EPS).
Infosys had previously announced buybacks. The company's first buyback, in 2017, returned Rs 13,000 crore to shareholders at Rs 1,150 per share. In 2019, the company announced a share buyback programme worth Rs 8260 crore at a price of not more than Rs 800 per share.