On Sunday, 11th April, Infosys has announced that the Board will consider the Share Buyback on the Board Meeting i.e., to be held on 14th April 2021. Why is the company considering Buyback of Infosys Shares? Go through this article to know more about this update about Infosys Share Buyback.
One of the leading IT companies in India, Infosys is planning for a Buyback of shares. The company announced the buyback of shares and its consideration at the Board Meeting, going to take place on 14th April 2021. Quarterly Results of Q4FY21 will also be announced by the company on the same day. Infosys has already given the intimation regarding the buyback to the stock exchanges.
But, this case does not apply in the case of Infosys. As all the IT companies including Infosys are trading at a premium valuation. Such companies are trading at 30%-40% above their 3-years or 5-years Median PE.
IT industry is not a capital-intensive industry. It is a human-intensive industry. And, Company is having a cash-cow business. Hence, IT companies are left out with 2 options: Dividend Payout or Shares Buyback.
And in the case of Shares Buyback, the number of outstanding shares in the markets decreases which ultimately increases by Earning Per Share (EPS).
Generally, the Buyback of shares by IT Companies is appreciated by the market and hence we can expect the same case with Infosys too if the Board approves the Shares buyback. More clarity to this information will come after the board meeting and hence one should not react immediately to this update specifically.