Infosys Unveils Record Rs 18,000 Crore Share Buyback: What It Means for Investors

Infosys recently announced its largest-ever share buyback plan worth Rs 18,000 crore, signaling robust confidence in its long-term growth despite ongoing industry challenges.

Key Details of the Buyback

Infosys is conducting this buyback through a tender offer, where shareholders can sell their shares back to the company at a premium over the market price for a limited period. If demand exceeds the allotted buyback size, shares are accepted on a proportional basis. Historically, Infosys has employed similar buybacks, with prior rounds in 2017 (Rs 13,000 crore), 2019 (Rs 8,260 crore), 2021 (Rs 9,200 crore), and 2023 (Rs 9,300 crore).

Strategic Implications

This move showcases Infosys management’s belief in the company’s future cash flows and resilience, despite facing near-term revenue headwinds and a shifting landscape driven by AI-led disruption. Analysts assert that such buybacks enhance EPS (Earnings Per Share) and ROE (Return on Equity), offering more tax-efficient returns to investors compared to dividends and optimizing the company’s capital structure in the face of surplus cash reserves.

Impact on Shareholders and Stock Performance

After the announcement, Infosys shares closed 1.3% lower at Rs 1,512 amid some profit booking, although the stock has declined about 20% year-to-date due to broader caution about the company’s growth outlook. Analysts note that past buybacks have typically supported Infosys’ share price over the 3-6 months following the announcement, even though short-term volatility can occur.

Current Financial Health and Business Outlook

Despite a subdued outlook with guided growth of just 1-3% in constant currency for the current fiscal year, Infosys has a strong foundation. The company secured around $3.8 billion in large deals in Q1, with 55% being net new contracts. Additionally, as of June, Infosys has about Rs 40,000 crore in cash and liquid investments, bolstering its stability in uncertain times.

Technical and Trading Perspective

Technical analysts highlight Rs 1,485 as a critical support level. As long as the stock stays above this threshold, the trend is expected to remain upward. Price targets of Rs 1,540 and Rs 1,560 have been suggested for near-term moves, with a stop-loss at Rs 1,485—a strategy favoring buying on dips while exercising caution.

Conclusion

The Rs 18,000 crore buyback is a noteworthy step in Infosys’ capital return strategy, reflecting the management’s confidence in navigating industry shifts and leveraging its strong cash position. For investors and market watchers, this signals strength and commitment, even as challenges persist in the broader IT sector.