The stock has lost more than 50% of its value since the company announced a share buyback in April. This shows a serious crisis of confidence among investors

Moneylife Digital Team

Infinite Computer Solutions (India), which has launched a share buyback amounting Rs27 crore, continues to languish on the market, accentuating the concerns of investors.

The Infinite stock lost more than 60% from Rs186 on 13th April, when the company announced the buyback, to 30th August, when it closed at Rs Rs71.65 on the National Stock Exchange (NSE).

Infinite went public in January last year. But on 11 April this year, the board of directors suddenly decided to buyback 9.9% of its equity at a price not exceeding Rs230 a share. This ignited concerns among shareholders and precipitated the fall in the share value. (Read, 'Infinite Computer's share buyback after 16 months of IPO raises several questions'.)

Last week, the company informed the NSE that till 26th August it had bought back a little over 9.82 lakh shares for Rs12.36 crore, completing about 45% of the buyback amount planned.

In the past two trading sessions-on Friday and Monday-the stock has gained over 20% even while the broader market has slipped. In the morning session today, it continued to move up, to a little over Rs91.

Market sources tell us that despite the short speculative rally, this stock will be unable to attract the interest of genuine investors.

In its response to the Moneylife article mid-June, the company said that the only reason it had undertaken the buyback was that it felt its shares were highly undervalued, given the prospects, and that was the only reason. Apparently, investors don't yet agree on this. The stock has badly sagged even after the so-called buy back scheme has been well underway.

In the quarter ended June 2011, Infinite's consolidated revenues stood at Rs262.30 crore, a 5.8% growth, q-o-q, operating profit grew by 4.9% to Rs44.7 crore, but net profit (after tax) was stagnant Rs29.90 crore.