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Infosys’ biggest-ever share buyback opened for subscription on Wednesday, offering eligible shareholders an opportunity to tender their shares at a significant premium to the market price. The Rs. 18,000 crore buyback will run from November 20 to November 26, giving investors five trading days to participate through the tender route.
Only shareholders who held Infosys stock as of the record date, November 14, are eligible to tender their shares. This includes more than 25.8 lakh small shareholders, defined as those with holdings valued up to Rs. 2 lakh.
Infosys confirmed that the buyback is being carried out through its internal cash reserves, which is an indication of the company’s strong financials and regular free cash flow generation.
Infosys plans to repurchase 10 crore fully paid-up equity shares, amounting to 2.41% of its paid-up share capital. The buyback price has been fixed at Rs. 1,800 per share, representing a premium of roughly 17-21% over market levels.
The company has reserved 15% of the buyback size for small investors. Eligible retail shareholders will have an entitlement ratio of 2:11; they will be able to tender two shares for every eleven shares held. For the general category, the entitlement ratio will be 17:706.
Promoters and the promoter group, including industry veterans Nandan Nilekani, Narayana Murthy, and Sudha Murthy, have decided not to participate in the buyback. Their decision increases the potential acceptance ratio for public shareholders, particularly retail investors.
Analysts say the buyback presents a compelling short-term opportunity, especially for retail investors. According to market experts, the premium offered by Infosys makes the tender route attractive for those in lower tax brackets, as their post-tax gains remain meaningful.
However, taxation plays a key role. Since buybacks are treated as “deemed dividends” under current tax rules, gains are taxed at the investor’s income slab.
For high-income individuals facing 30%+ tax, the net benefit narrows significantly and could make a regular market sale near the buyback price more efficient.
Still, many analysts believe the buyback provides stability to long-term shareholders. With the company reducing its equity base, the move supports earnings per share (EPS) and return on equity (ROE) factors that help deepen long-run investor confidence.
Also Read: Infosys Ignites IT Rally with Rs 18,000 Cr Buyback; Stock Surges 3.78%
This marks Infosys’ fourth share buyback since 2017, following earlier programmes of Rs. 13,000 crore, Rs. 8,260 crore, and Rs. 9,300 crore.
The company’s willingness to return surplus capital underscores management’s confidence in its balance sheet strength despite the broader IT industry’s muted earnings environment. Analysts expect heightened retail participation in the coming days.
