The Infosys board will meet on April 14 to consider a share buyback, the third by the company.

India’s second largest IT services company will also declare its results for the fourth quarter ended March 31, 2021 on April 14 (Wednesday).

The results season will kick off with Tata Consultancy Services (TCS) on Monday as the market looks to find its mojo again after being battered by a wave of bearish sentiment with investors trying to pick their way through a minefield of conflicting data and overseas cues.

In a buyback, a company buys its shares from the market, which are subsequently extinguished.

Share buybacks generally improve earnings per share, support prices in poor market conditions and allows the return of surplus cash to shareholders.

Bangalore-based Infosys had a free cash flow — which is cash provided by operating activities less capital expenditure — of Rs 5,683 crore at the end of March.

In 2019, Infosys changed its capital allocation policy to return 85 per cent of its free cash flow back to shareholders cumulatively over a period of five years starting 2019-20.

Earlier, the company was distributing up to 70 per cent of its free cash flow to the shareholders. This will be done through a combination of semi-annual dividends or buybacks.

Infosys had come out with its first share re-purchase in 2017 of Rs 13,000 crore followed by a Rs 8,260 crore programme two years later.

The management in 2019 had said the company will not trim its capital allocation policy because of the 20 per cent tax that the Modi government has imposed on share buybacks by listed companies.

The buyback comes at a time IT services companies are expected to report robust numbers for the January-March quarter and guide for a promising year ahead. The pandemic has seen companies reporting strong deal wins as clients across geographies and verticals have stepped up their technology spend.

While announcing its third quarter earnings, Infosys had upped revenue guidance for 2020-21.

It had projected revenue to grow 4.5-5 per cent in constant currency compared with its previous estimate of 2-3 per cent growth. The operating margin guidance was raised to 24-24.5 per cent against the earlier 23-24 per cent.

Infosys is now expected to give out a double digit revenue growth guidance for the current fiscal.

“We expect companies in our coverage universe to further accelerate year-on-year (YoY) revenue growth momentum on broad-based demand, strong deal wins, continued traction in digital and

cloud, ramp-up of large deals and demand recovery in highly impacted verticals such as travel and hospitality,” analysts at Emkay Global said in a note.

Emkay said the revenues of top IT companies were likely to grow 2.2-3.9 per cent quarter-on-quarter in constant currency terms.

Cross currency movement is likely to aid reported dollar revenue by 80-110 basis points in the fourth quarter for the next tier of companies.

“We expect Infosys and HCL Technologies to provide double-digit revenue growth guidance of 12-15 per cent and 11- 13 per cent YoY in constant currency terms, respectively.’’

The brokerage expects Infosys to report net profit of Rs 5,151 crore for the fourth quarter ended March 31, 2021, an increase of 19.2 per cent over the same period of the previous year while TCS is expected to post a profit of Rs 9,209 crore-a growth of 14.4 per cent as compared to the year-ago period.