Infosys raises dividend payout rate to 50% to placate shareholders

MUMBAI: Infosys said it would increase the rate of its dividend payout to 50% of post-tax profits effective FY15, as India's third-largest IT services provider looks to placate shareholders who were concerned about its capital allocation.

The company also announced a 1:1 bonus issue of shares and a 1:1 stock dividend of American Depositary Shares. The record date for the bonus issue has not yet been determined, Infosys said in a statement.

“Consistent with our objective of increasing shareholder returns, the Board has approved an increase in the dividend pay-out ratio to 50% of post-tax profits,” Rajiv Bansal, chief financial officer at Infosys, said in a statement.

Infosys previously paid out 40% of its post-tax profits as a dividend to its shareholders.

Last year, Infosys' former chief financial officer V Balakrishnan, TV Mohandas Pai and DN Prahlad had asked the company to spend over $1.5 billion buying back shares, as the company had not articulated a strategy for the use of its large pile of cash and cash equivalents.

As of March 31, Infosys said it had liquid assets – including cash, cash equivalents, available-for-sale financial assets, certificates of deposit and government bonds – worth about Rs 32,585 crore.

Since Sikka took over the helm, Infosys has been making acquisitions and investments in startups, as it takes steps to get more out of its cash hoard.