Infosys Ltd, India’s second-largest IT services firm, has announced its biggest-ever share buyback worth Rs 18,000 crore, marking a significant move to return wealth to shareholders. Approved by the board, the buyback will be conducted via the tender offer route at Rs 1,800 per share, a 19% premium to the September 11 closing price of Rs 1,509.5.
What is a Share Buyback?
A buyback, or share repurchase, is when a company buys its own shares from existing shareholders. This reduces the number of shares available in the open market, thereby potentially improving the earnings per share (EPS) and supporting the stock price. Companies often use buybacks as an alternative to paying higher dividends.
Infosys’ Buyback Details
The current offer involves the purchase of 10 crore shares of face value Rs 5 each, which amounts to 2.41% of the company’s total paid-up equity capital. This is Infosys’ fifth buyback—previous ones ranged from Rs 8,260 crore to Rs 13,000 crore between 2017 and 2022. The company, with cash reserves of Rs 24,455 crore, sees this as a way to reassure investors after a nearly 20% drop in share price since January 2025.
Why Infosys is Opting for a Buyback
Analysts highlight that the buyback reflects the company’s confidence in its long-term value, despite global economic and geopolitical headwinds affecting IT demand. By reducing outstanding shares, Infosys aims to boost shareholder returns while ensuring its stock price doesn’t remain undervalued in the market.
How Investors May Benefit
Shareholders stand to gain from:
- Premium pricing: The buyback price offers nearly 19% more than the market price.
- Tax efficiency: For retail investors, especially those holding under Rs 2 lakh worth of shares, the scheme may prove more tax-friendly than dividends.
- Improved valuations: With fewer shares outstanding, Infosys’ EPS and return ratios are expected to strengthen.
However, tax implications vary depending on holding period and individual tax slabs. The buyback proceeds are considered as dividends under current law, but the cost of acquisition may be carried forward as a capital loss against future gains.
The Bigger Picture
Infosys joins peers like TCS, Wipro, and HCL Tech in relying on buybacks to reward shareholders. With steady dividend payouts and now its largest-ever repurchase, Infosys signals its commitment to sustaining investor confidence amid industry uncertainties.
