Bangalore: Two of the most prominent ex-Infoscions, T V Mohandas Pai and V Balakrishnan, the company's former Board members and CFOs, and former senior vice-president D N Prahlad – have recommended an immediate buyback of shares worth Rs 11,200 crore (approx $2 billion) to restore investor confidence in the company's stock that has lagged its peers by a great measure for several years.
They believe the step will benefit the company because there is a "dramatic valuation disconnect" between the shares of Infosys and its peers, and this needs correction.
"By writing the letter, we are providing the voice to thousands of other shareholders of the company, both institutional and retail, who overwhelmingly support a large cash return to shareholders of the company," they said.
The letter pointed out that the "abrupt nature" of management change at Infosys had initially raised "serious concerns, not only in our minds but among many stakeholders", and the buyback measure will serve as a good way to show confidence in the company and its new CEO.
The former Infoscions have proposed a buyback at the 52-week high share price of Rs 3,850 a piece, which is a premium of 9.6 per cent over the company's closing price of Rs.3,513 on Tuesday.
The letter said the company has close to Rs 30,000 crore in cash and cash equivalents, and it generates close to Rs 12,000 crore of operating cash flows every year. They said returning Rs 11,200 crore would not affect meeting its strategic objectives.
