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Infosys has announced a significant Rs 18,000 crore share buyback at Rs 1,800 per share, a 19% premium; What should investors expect?
Infosys Buyback
Infosys Share Price: Infosys shares surged more than 2% on September 12, trading at Rs 1,539.90 in early deals, after the board of India’s second-largest IT services company approved its biggest-ever share buyback worth Rs 18,000 crore. Investors welcomed the move, which came in higher than market expectations.
Details of the Buyback
In an exchange filing on September 11, Infosys said the buyback will not exceed 25% of its aggregate paid-up capital and will cover 2.41% of the company’s equity. The buyback price has been fixed at Rs 1,800 per share—representing a premium of over 19% on the stock’s previous close of Rs 1,509.70.
This marks Infosys’ fifth share repurchase and its first since 2022, when it bought back Rs 9,300 crore worth of shares. Unlike the last three programs, which were executed through open-market purchases, this one will follow the tender offer route. The record date for the program is yet to be announced.
Why Now?
The buyback comes at a time of heavy foreign investor selling in Indian IT stocks. FIIs pulled out Rs 19,901 crore in July and Rs 11,285 crore in August. Analysts say the move signals management’s confidence despite macro uncertainties.
Morgan Stanley, which holds an Equal Weight rating with a Rs 1,700 target, noted: “Given current timing amid heightened macro uncertainty around tariffs, this is a vote of confidence on stability in F26 guidance.”
Fund manager Akshay Badjate of Merisis PMS said the move could lift earnings per share by 3–5%, citing Infosys’ strong balance sheet with over Rs 40,000 crore in cash and liquid investments.
Capital Return Strategy
Infosys has committed to returning 85% of free cash flow (FCF) to shareholders during FY25–29. In FY25, about 52% of its FCF was distributed via dividends. The latest buyback, combined with expected dividends, will return more than 100% of FY26F FCF, according to Nomura.
Nomura analysts maintain a Buy rating with a target price of Rs 1,880, highlighting an attractive 4.4% dividend yield. The brokerage expects the buyback to be largely EPS-neutral in FY26.
Morgan Stanley estimates it could take 3–4 months for the repurchase to be completed. Jefferies, meanwhile, cut its target from Rs 1,860 to Rs 1,750, warning that large-cap IT stocks may stay range-bound amid weak growth. However, it favours Infosys and HCL Tech, citing relatively lower exposure to AI-led revenue risks and stronger earnings growth potential of 6–7%.
Growth Outlook and Concerns
Despite the buyback, growth expectations remain modest. Nomura projects USD revenue growth of 3.8% year-on-year in FY26F, including around 40 basis points from acquisitions, excluding the recent Versent deal.
While the buyback provides short-term support, some caution that Infosys needs a clearer long-term investment strategy. Badjate said: “From a longer-term perspective, it would have been better if management had laid out a clear plan for investing excess cash into emerging technologies such as AI research, quantum computing, or strategic investments in startups.”
What It Means for Shareholders
For investors, the buyback offers immediate value through the premium price, potential EPS accretion, and continued high dividend payouts. In a challenging market for IT services, Infosys’ strong cash reserves give shareholders multiple avenues of return even as revenue growth stays muted.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
September 12, 2025, 11:15 IST
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