Buyback offer fails to cheer, shares Tank 5 per cent

Mumbai: The share-buyback plan approved by Infosys failed to cheer up the investors’ sentiment as the stock extended its fall by 5 per cent on Monday amidst concerns that the class action suit being planned by several law firms in US could jeopardise the buyback plan.

On Saturday, Infosys  announced that it would buyback shares worth upto Rs 13,000 crore from investors at Rs 1,150 per share, a premium of 24.6 per cent to its Friday’s closing price of Rs 923.

After taking a 10 per cent plunge on Friday following the resignation of Vishal Sikka, the shares of Infosys tanked 5.37 per cent on Monday to close the session at Rs 873.50 on the BSE.

Experts added that the exit of Mr Sikka amidst the growing trust deficit between the founders and the current management has raised concern about further exits at top level and a slowdown in new orders in the near term.

“The reports about class action suits being planned by top three US law firms against the company to recover losses suffered by investors have raised doubt about the company’s buy back plan. Since, Infosys is also listed in US, investors fear about the possibility of US court putting the company’s plan in abeyance which triggered further selling in the stock despite its buy back plan at an extremely high premium,” said Ambareesh Baliga, senior research analyst.

Stating that the nature of the exit could make finding the next CEO more difficult, analysts at brokerage house Jefferies said, “Preventing attrition especially in the senior management, sales, and delivery personnel would be important. Infosys senior managements exits have been high over the past 1-2 years and there is a risk this could spike in the near-term,” Jefferies added.