On September 11, 2025, Infosys, India’s second-largest IT services company, announced its largest-ever share buyback program worth Rs 18,000 crore. This move, the fifth in the company’s history, has sparked significant interest among its 26 lakh shareholders and the broader market. The buyback, executed through the tender offer route, will see Infosys repurchase approximately 10 crore equity shares at Rs 1,800 per share, representing a 19% premium over the stock’s closing price of Rs 1,509.70 on the NSE on Thursday.
Why the Buyback?
Infosys’ decision comes at a time when the IT sector is grappling with challenges, including a 24% year-to-date decline in its stock price and a broader 21% slump in the Nifty IT index. The company has faced headwinds from geopolitical tensions, rising US tariffs, and cautious technology spending by clients in key markets like the US and Europe. Additionally, foreign institutional investors (FIIs) have been offloading Indian IT stocks, with outflows of Rs 19,901 crore in July and Rs 11,285 crore in August.
The buyback serves multiple strategic purposes:
Boosting Shareholder Value: By repurchasing 2.41% of its equity, Infosys aims to reduce the number of outstanding shares, which is expected to improve key financial metrics like Earnings Per Share (EPS) and Return on Equity (ROE).
Signaling Confidence: The move reflects management’s belief in the company’s long-term growth and cash flow stability, despite a muted revenue growth forecast of 1–3% for FY26.
Capital Allocation: With cash reserves of Rs 45,200 crore as of Q1 FY2026, Infosys is deploying excess liquidity to reward shareholders, aligning with its policy of returning 85% of free cash flow over five years through dividends and buybacks.
A Look at Infosys’ Buyback History
This is not Infosys’ first foray into share repurchasing. Since 2017, the company has conducted four buybacks:
2017: Rs 13,000 crore via tender offer at Rs 1,150 per share.
2019: Rs 8,260 crore via open market route at an average price of Rs 747.38 per share.
2021: Rs 9,200 crore via open market route at a maximum price of Rs 1,750 per share.
2022: Rs 9,300 crore via open market route at a maximum price of Rs 1,850 per share, repurchasing over 50 million shares.
The 2025 buyback, at Rs 18,000 crore, surpasses all previous programs in scale and is the first to use the tender offer route since 2017. Unlike the open market route, where shares are bought over time at prevailing market prices, the tender offer allows shareholders to sell their shares at a fixed premium, providing immediate value.
What’s in It for Shareholders?
The Rs 18,000-crore buyback offers several benefits for Infosys’ shareholders:
Premium Payout: The offer price of Rs 1,800 per share is a 19% premium over the closing price on September 11, 2025, providing an attractive exit opportunity for those looking to cash out.
Tax Efficiency: While the Finance Act 2023 shifted the tax burden on buybacks to shareholders (taxed as per their income slab, up to 36%), buybacks remain more tax-efficient than dividends for many retail investors, as mutual funds and FIIs often face lower or no taxes.
Long-Term Gains: For shareholders who hold on, the reduction in outstanding shares is expected to enhance EPS and ROE, potentially supporting future stock price appreciation.
However, analysts caution that the buyback’s appeal may be tempered by recent tax changes, which eliminate the earlier 20% concessional tax rate for shareholders. Additionally, some experts suggest that the decision signals Infosys may not have immediate plans for large-scale acquisitions or expansions, opting instead to return capital to shareholders.
Market Reaction and Analyst Views
The announcement of the buyback proposal on September 8, 2025, led to a 5% surge in Infosys’ stock price on September 9, closing at Rs 1,502.40 on the NSE. However, the stock settled 1.3% lower at Rs 1,512 on September 11 as investors booked profits ahead of the board’s decision. The Nifty IT index also saw a 3% uptick, reflecting positive sentiment spilling over to peers like Wipro.
Analysts have mixed views:
Morgan Stanley estimates the buyback size at Rs 10,000–14,000 crore, though the approved Rs 18,000 crore exceeds expectations. They see it as a supportive move for valuations given Infosys’ forward P/E of 20.8x compared to its five-year average of 24.8x.
HDFC Securities notes that the buyback comes at a crucial time for the IT sector, boosting investor confidence amid macroeconomic headwinds.
Kush Ghodasara, a market expert, advises caution, suggesting that the IT sector may remain sideways or bearish for the next six to eight months. He recommends that investors consider participating in the buyback to lock in profits.
Could This Spark More IT Buybacks?
Infosys’ move has raised speculation about similar actions from competitors like Tata Consultancy Services (TCS) and Wipro, both of which are eligible for buybacks, having completed their last programs over a year ago. Brokerage CLSA believes Infosys’ announcement could prompt TCS to consider a Rs 20,000-crore buyback to bolster its stock, which has fallen 23.7% year-to-date. TCS’s history of buybacks, ranging from Rs 16,000 crore to Rs 18,000 crore, supports this possibility.
The Bigger Picture
Infosys’ Rs 18,000-crore buyback is a strategic move to navigate a challenging environment for the IT sector. By leveraging its robust cash reserves and adhering to its capital allocation policy, the company is signaling confidence in its financial health while addressing shareholder concerns amid stock underperformance. For investors, the buyback offers a chance to realize immediate gains at a premium or benefit from improved financial metrics in the long term. As the IT industry faces global uncertainties, Infosys’ bold step could set the tone for others in the sector to follow suit.
The outcome of the buyback and its impact on the stock will depend on participation rates and broader market conditions. Investors are advised to consult financial advisors to assess whether tendering shares or holding for long-term gains aligns with their goals. For now, Infosys remains in the spotlight as it executes this significant capital return strategy.
