Print Edition - 2017-04-14 | MONEY
Infosys to return $2b to shareholders
Apr 14, 2017-
Infosys set a $2 billion cash return to shareholders and appointed an independent director as co-chairman, moves that may placate a group of founders and former executives who have criticised India’s second-biggest software services exporter.
Some founders and former executives of the Bengaluru-based company have publicly accused its board of governance lapses and had urged it to reward shareholders through a share buyback like rival Tata Consultancy Services did with a $2.4 billion buyback announced in February.
Infosys said on Thursday it would return up to 130 billion rupees ($2.02 billion) to shareholders in the fiscal year ending March 2018, adding the manner of the payout will be decided by the board. It also appointed independent director Ravi Venkatesan as co-chairman of the board. Hugh Young, managing director of Aberdeen Asset Management Asia, said the payout and the new appointment were positive. Aberdeen owned Infosys shares as per latest data available as of end-February.
“Infosys’ balance sheet remains very strong and can still accommodate proper investment,” said Young. “The new appointee hopefully allays governance, expertise concerns.”Shares in Infosys were down 3.7 percent, however, as the market had been hoping for a larger payout and a stronger outlook.
Infosys said it expects revenue to grow 6.5 percent to 8.5 percent in constant currency terms during 2017-18.
“It is a challenging environment out there,” CEO Vishal Sikka said at a press conference, adding that the outlook was tempered by the company’s most recent quarterly performance.
Infosys is also likely to struggle to reach its ambitious $20 billion revenue target by 2020, as the $150 billion Indian software service sector has been hit by cautious client spending due to a wave of protectionism under the new US administration.
“With the performance that we have seen in the last few quarters it was already a difficult thing and now it’s an incredibly difficult thing,” Sikka said.
The United States is the largest market for Indian software service companies and an Indian industry lobby group in 2016 cut its forecast for the sector’s growth in the year to March due to global uncertainties.
Published: 14-04-2017 10:02