Infosys Ltd. will, this week, consider a proposal to buy back shares as it seeks to deliver on an earlier commitment to reward shareholders.
The Vishal Sikka-led software services outsourcer will mull the buyback proposal at its board meeting on August 19, it said in a stock exchange filing. The company has also closed the trading window with immediate effect and will resume trade on August 22.
Infosys had promised to return up to Rs 13,000 crore to shareholders in the financial year 2017-18 from its cash surplus – either as a buyback or a dividend or a combination of both – after its January-March quarter earnings. It had also revised its capital allocation policy, sayingthat it will distribute up to 70 percent of its free cash flow.
Four large Indian software services providers, including Tata Consultancy Services, Wipro and HCL Technologies have already completed their buybacks.
Infosys' buyback took more time as the Bengaluru-based company is listed in four countries, making the buyback more complex, according to a Nomura report.
“As the company has a large global shareholder base and is listed in multiple countries, the manner of distribution to shareholdersrequire compliances and approvals under several jurisdictions. We are in the process of finalizing a distribution mechanism that complies with applicable regulatory requirement in the best interests of all shareholders,” Infosys’ Chief Financial Officer MD Ranganath said during the company’s June quarter earnings call.
Former chief financial officer, and current board member of Infosys, Mohandas Pai had called the buyback announcement a "step forward" on a issue that he has been pursuing for the last two years.The company's cash and equivalents stood just over USD 6 billion at the end of June, while its operating cash flow stood at USD 644 million.- Bloomberg Quint