INFY Buyback anatomy

Detailed analysis of the buyback

Total no. Of shares is 230 Cr. Shares. So, the current market capitalization is 230 Cr. x current market price (923)

Infosys is buying back shares worth 13000 Cr at a price of 1150.

So, the number of shares it'll buy back is 13000 Cr./1150
Which is around 11.3 Cr. Shares

The allocation for retail Investors from this 11.3 Cr. Shares is 15%, coming around 1.7 Cr. Shares.

Let me tell who are all retail investors. Whoever is holding shares worth 2 lakhs or less.

Now, let's find out how many shares are held by them, this comes around 2.87 Cr. Shares

Infosys buys back maximum 1.7 cr. Shares from available 2.87 Cr. Shares

So, if everyone participates in the buyback, company will equally buy shares from everyone at a ratio of 1.87/2.87, which is 59.2%. This is called acceptance ratio.

So, if we have 2L worth of shares ( which comes around 200000/923= 216 shares), you can estimate how many shares that Infosys will buy back from you, as below:

1. If everyone is participating,
Acceptance ratio is your number of shares that infy will buy back, which is 216*0.592, coming around 128. This is the worst case.

2. For Infosys to buyback all shares(216) that you have, there must be offer <= 1.7 crores

Strategy to follow:
     Let's take the worst case scenario. 216 shares we hold, and infy will buy back 128 shares. So, after buyback we'll still have 88 shares. To avoid the risk of these shares going down in price, we can either short futures or buy PUT option.

DRL - an Interesting proposal on a high tide

My calculations are based on last 6 months moving trend of Dr. Reddy's and the recent news.

It has gone down below the 200 day moving average of 2800. And the news is that FDA has served 13 notices on inspecting it's production units in Srikakulam. Turned out that the notice wasn't that severe. FDA has asked just for an explanation of certain irregularities in the production.

The market reaction went bad as it coincides with the 200 day moving low.

I see a strong support @2600+ levels, if at all it goes there.

I still hold the target of 3200+ by next quarter

Other than that I don't see any major hiccups.