Worried about the future of Infosys following a major leadership change, two former CFOs at the India-based software services firm are calling for a $1.83 billion stock buyback, Reuters reported.
The demand comes less than a week after one-time SAP AG executive Vishal Sikka assumed the CEO reins at Infosys “while all founders, led by N.R. Narayana Murthy, either retired or took up non-executive roles with the board.”
In a letter to the firm’s board, Infosys’ erstwhile financial chiefs V. Balakrishnan and T.V. Mohandas Pai along with D.N. Prahlad, a former senior vice president, urged the company to buy back stock at 3,850 ($62.83) rupees a share, a premium of 9.6 percent over the company’s closing price of 3,513 ($57.33) rupees on Tuesday.
Further, all three have advised Infosys to launch a buyback program that takes into account 40% of last year’s net profits. As noted by Reuters, the buyback, if implemented, would be the company’s first since going public 21 years ago.
The former officers also broached the subject of Infosys’ massive cash reserve, which they estimate to be close to 300 billion rupees (almost $4.9 billion).
“Irrespective of the liquidity Infosys may require with respect to any investment in innovation or M&A going forward, we strongly believe that the company is clearly overcapitalized,” said the letter as excerpted by Reuters.
So far, Infosys has not made any specific statements on the buyback request. But company spokesperson Sarah Gideon did tell Reuters via e-mail that “the Infosys board and the management receives requests on a variety of subjects from shareholders and investors on an ongoing basis … Should there be any development that will impact our shareholders, we will immediately inform the regulatory bodies and shareholders on priority.”
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