Infosys' ₹18,000 cr buyback gets 8.3x bids; 826 mn shares tendered

Infosys' Rs 18,000-crore buyback drew bids for 826 million shares against 100 million on offer, with experts saying participation was driven by investors in lower tax brackets

Infosys shareholders tendered over 8 times more shares than the buyback size. According to data provided by the BSE, the ₹18,000-crore buyback saw investors tender 826 million shares against the offer size of 100 million shares.

 

The five-day tendering process ended on Wednesday.

 

Under the latest buyback programme, the IT major will extinguish 100 million shares (2.41 per cent of the paid up capital) by repurchasing them at ₹1,800 apiece. Shares of Infosys last closed at ₹1,558, up 1.8 per cent.

 

Under the buyback terms, small shareholders will be entitled to 2 equity shares for every 11 equity shares held on the record date. For all other eligible shareholders in the general category, the entitlement is 17 equity shares for every 706 equity shares held.

 

The acceptance ratio, however, could be different as wealthy investors could opt out due to tax considerations. Experts said the buyback was a big draw for those on the low tax bracket.

 

The IT major's promoters, including Narayana Murthy and Chairman Nandan Nilekani, earlier said that they will not offer their shares in the buyback process. The promoter group collectively holds 13.05 per cent stake in the company.

 

The buyback amount received by shareholders will be treated as a dividend and will be taxed based on slab rates.

 

The cost of the shares bought back by the company will be treated as a capital loss, which can be offset against any other capital gains.

 

If there are not enough capital gains to offset the loss in the current year, it can be carried forward and offset against capital gains in future years, up to a maximum of eight years.