Why is infosys' buyback taking time

Why is Infosys' buyback taking time?

Nomura believes an open market purchase would be a better option than a tender offer for Infosys

Given the performance of stocks over the past few months and the mounting cash pile in their books, most information technology companies - Infosys, TCS, Wipro and HCL Technologies have announced a buyback to reward shareholders over the past few months.

Also Read: India Inc's buyback party: A Rs 25,000-crore splurge in first half of 2017 The buyback in most cases was through the tender route, under which repurchases were executed using a fixed price tender offer. TCS board, for instance, approved and completed its proposal to buy back up to 56.14 million equity shares of the company for an aggregate amount not exceeding Rs 16,000 crore at Rs 2,850 per equity share. Besides TCS, HCL Technologies, too, has completed the buyback process.

On a year-to-date basis, Infosys has lost over 3% at the bourses as compared with around 20% rally in the Nifty50 index, ACE Equity data show.

Also Read: Buyback offers: What should traders do if a company offers one?

Surprisingly, Infosys that announced a buyback ahead of its peer TCS, is yet to set the ball rolling.

Despite more than three months since the company first indicated its intention, the contours and approval of the buyback have not been received, reports suggest.

Also Read: Buyback offers: Options for traders

In a recent report, Ashwin Mehta and Rishit Parikh of Nomura list reasons that could have led to the delay. As of now, none of the regulators - SEBI (India), SEC (US) or Euronext - has approved the buyback, they say. Read More