Infosys share price hits 52-week high as board to consider buyback on April 14

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Infosys share price touched 52-week high of Rs 1,480, rising over 2 percent in the early trade on April 12 after the IT company said it would consider a share buyback during a meeting on April 14.

"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," the company said in its release on the exchanges.

The board will meet to approve and take on record the audited consolidated financial results of the company and its subsidiaries for the quarter and year ending March 31, 2021. It will also recommend a final dividend for the financial year ending March 31, 2021.

Buyback refers to the repurchasing of free-float shares of a company by the promoters. In a buyback issue, the company pays its shareholders a fixed value per share and re-absorbs that portion of its ownership previously distributed among public and private investors.

The process enables the repurchase of shares from shareholders, usually at a higher price than the market price.

Companies go for buybacks for various reasons such as ownership consolidation plan, undervalued price or for boosting its key financial ratios, making companies look more healthy financially.

Foreign broking house CLSA has maintained a "buy" call with a target at Rs 1,660 per share.

According to CLSA, the buyback could range between $1.2-1.5 billion (1.1-1.5 percent of its equity), while it should be broadly EPS neutral (-0.5 to -0.6 percent on FY22e EPS).

The company recently announced a strategic long -term collaboration with ArcelorMittal, the world’s leading steel and mining company.

ArcelorMittal has chosen Infosys to help accelerate the company’s digital transformation journey and enable next-generation application management and business process management (BPM) services for ArcelorMittal Europe.

Brokerage house Prabhudas Lilladher believes the IT sector will maintain its strong performance in FY22 given the sector’s entry in technology upcycle, digital going mainstream, strong order book and deal pipeline, accelerated demand for cloud adoption and broad-based demand across all industry verticals.

It expects Infosys and TCS to outperform in Tier-1 pack and hence remain its preferred picks. HCL Tech and Tech Mahindra continues to be attractive on relative valuation discount. "We like Mindtree in Tier-II and L&T Technology Services in ER&D space," it said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.