Did anyone get mail to participate in Infosys buyback offer?
This has been discussed here.
Want to know from Zerodha as to what is the cutoff date for sending the scanned copy of the tender form to you for availing the buyback offer.
The cut-off date for participation in the buyback will be mentioned in the tender form. You have to ensure you send your tender form to Zerodha before this date so your buyback bid can be placed.
So if the entitlement ratio is 59 shares per person, then if I bid 20 shares at the max buyback price mentioned (1150 RS), then all my 20 shares will be bought for sure ??
Or I need to bid for some lower price than the maximum price to make my shares to be bought ??
The entitlement ratio is a % which is calculated as below:
Let’s assume the following data:
Closing price as of Record date: 925
Number of shares held by retail investors: 3 crore shares
Buyback price: 1150
Number of shares eligible for buyback: 1.69 crore shares
Entitlement ratio = Number of shares eligible for buyback / Number of shares held by retail investors
= 1.69/3 = 56%
So if you hold 20 shares, then your buyback entitlement is 11 shares which will be bought back by Infy at Rs.1150/share.
But if you tender all your 20 shares, then whether the additional shares will be bought back or not depends on the acceptance ratio which is based on the number of people applying for the buyback.
For a retail investor the total investment should be below 2 lacs, what if the person has shares valued above this value? Is that person not eligible for this?
If a shareholder holds above Rs.2 lacs worth of shares as of Record date, then he will be considered as an HNI investor. HNI investors are eligible for the buyback but I’m unaware of the quota set aside for the HNI category. The entitlement for buyback will depend on the HNI shareholding pattern and the quota set aside for HNI.
How will the company decide no of shares eligible. SHouldn’t all retail investors be eligible?
Will the 15% tax be deducted automatically? I am a student, and don’t fall in the taxable bracket. Will tax still be charged
Yes, all retail investors holding shares as of 1 Nov are eligible for the buyback. But the number of shares entitled for buyback is explained here.
There is no such thing as automatic deduction of capital gains tax. This is paid when you are filing for taxes.
If you held Infy for less than a year, then any gains on this investment will be considered a short term capital gain. But you can show this investment as a non-speculative business income, and the gains will then fall under your tax bracket. Since you have no other income, you don’t have to pay taxes on gains if it falls below the tax bracket.
Have query on buy back procedure,let say in Infy case the record date is 1st nov.I am holding the 100 shares of Infy in my demat account so i should get the buy back offer tender. now let say I shall sell my holding of 100 infy shares on 2nd Nov,then what will happen ?
Thanks in advance !
Well, nothing will really happen. If you sell out your Infy shares then it will go to someone else instead of you allowing Infosys to buy it back.
You could also buy back the shares after seling them since you already have the eligibility to buyback, tender them and still allow Infy to buy it back as they are buying it back at a 25% premium price of 1150 from current levels.
Thank you. Good information.
Hi Srinivas ,
I had bought 200 shares of Infosys on 30th October 9:25 AM , and as of today - Nov 1st - It still shows T1 200 . So this means I’m not elligible for the buyback? Wasn’t it supposed to be delivered to my demat today?
Yes, it will be delivered to your Demat end of today, 1 Nov which is the record date.
So yes, you are eligible for the buyback.
Thanks for the prompt reply Srinivas!
@Srinivas: Thanks a million for answers for queries!! Really helpful…
Just want to ask one more question… Will Buyback happen on bourse or off-bourse? If Infosys is buying back off-bourse, transaction will happen without STT payment and it might attract Capital Gain Tax for long term of 20% and as per slab for Short Term.
Can you please clarify the confusion?
Thanks in advance!
Buybacks executed via the tender offer route is routed through the exchanges, so STT will apply. In such a case, long-term capital gains are exempt from tax and short term capital gains will be taxed at 15% if you declare yourself as an investor while filing taxes. If you declare yourself as a trader for business income, then I presume you can show the stcg as a non-speculative business income and the gains will fall under the tax bracket. This depends on how you’ve declared yourself while filing taxes.
@Srinivas: Thanks for answering all the queries on Infosys, patiently and in so much detail. Well done and keep up the good work.
@Jacobchn Thank you, sir. Really appreciate your kind words.