Infosys Announces Biggest Ever Buyback At 19% Premium; Share Price In Focus After Rs 18,000 Crore Buyback

Infosys shares will be in focus on Friday, a day after the leading IT services company announced its largest share buyback since listing. The buyback is valued at Rs 18,000 crore and will be conducted through a tender offer. Shares will be repurchased at Rs 1,800 each, which is a 19% premium over the current market price. This move aims to enhance financial metrics and provide tax-efficient returns to shareholders.

Historically, Infosys has engaged in several buybacks, with previous ones in 2017, 2019, 2021, and earlier in 2023. The current buyback represents the fifth such initiative by the Bengaluru-based IT giant. This decision reflects management's confidence in the company's long-term cash flows and growth potential despite a cautious revenue outlook for this fiscal year.

Infosys Share Buyback Strategy

The tender offer allows Infosys to repurchase approximately 10 crore shares, representing 2.41% of its equity. This method provides investors with certainty about the value they will receive for their shares. If more shares are offered than the company intends to buy back, acceptance occurs on a proportional basis.

Market Reactions and Future Outlook

Despite the announcement, Infosys shares experienced some profit booking ahead of the board meeting, closing about 1.3% lower at Rs 1512 per share. The stock has faced pressure this year due to investor caution regarding growth prospects. The business environment remains uncertain due to unresolved tariffs and geopolitical issues affecting client spending decisions.

In recent quarters, Infosys secured deals worth $3.8 billion in large contracts during the first quarter, with 55% being net new deals. The company does not anticipate significant changes in performance for the second quarter and expects similar levels as before.

As of June end, Infosys had robust cash flows of around Rs 40,000 crore in cash and liquid investments. This financial strength provides stability amid an uncertain environment. Analysts suggest buying on small dips with a stop-loss at Rs 1485 while maintaining caution near support levels.

The company's guidance indicates expected growth between 1-3% in constant currency for this fiscal year. Despite challenges like reduced client spending and AI-led disruptions impacting business operations, Infosys remains confident about its future prospects.