Infy results impacts market despite share buyback

Even after Infosys announced plans to return Rs 13,000 crore from its cash pile to shareholders, the company’s shares of Infosys slumped 3.86% and impacted Sensex to drop 182 points to an over two-week low and the Nifty broke below 9,200.

Infosys reported an almost flat net profit in the March quarter and sales outlook that fell short of estimates.  Infosys shares ended at Rs 931.40 on Thursday, plummetting 37.40% compared with opening price of Rs 968.80. The 30-share index opened lower before slipping further when Infosys results raised concerns about others to follow. It was down 182.03 points, or 0.61%, at 29,461.45 at the close, a level last seen on March 28. In weekly terms, the Sensex fell 245.16 points, or 0.82%, while the Nifty was down 47.50 points, or 0.51%.

The IT index bore the brunt after Infosys’ revenue guidance and plan to return cash to shareholders fell short of the crease, going by the Street expectations.

The market is also affected by disappointing macro numbers and persisting military concerns relating to the Korean peninsula and West Asia.  The company’s decision to share buyback programme and a pledge to raise dividends is widely viewed to bring down the pressure from promoter shareholders who have been raising the governance issue for quite a long time.

The Infosys management is yet to come up with the concrete decision on the share buyback. According to analysts, factoring the dividend distribution tax, each share will fech at least Rs 49.

“Now we can confidently say that Infosys is moving from a growth stock to one which attracts risk-averse investors with a preference for high dividend yield,” said the analyst.

DH News Service

Promoters lose
While Infosys disappointed investors by reporting a 2.83% drop in consolidated net profit, its impact is well visible as the company’s promoter group on Thursday lost over Rs 1,200 crore in combined wealth during the quarter.

The slide happens at a time the promoter shareholders are waging a war against the management on governance issue. As per analysts, the slide in stock eroded the wealth of N R Narayana Murthy and his family, who together held around eight crore shares as of December 31, 2016, by Rs 331 crore during the quarter. The other co-founders Nandan Nilekani, S Gopalakrishnan, SD Shibulal and K Dinesh saw wealth erosion by Rs 268 crore, Rs 307 crore, Rs 179 crore and Rs 118 crore, respectively.