Infosys Launches Record ₹18,000 Crore Share Buyback

Infosys is set to open its largest-ever share buyback from November 20 to November 26, offering Rs 1,800 per share in a move that underscores its financial strength and commitment to shareholders. The Rs 18,000-crore plan surpasses its previous buyback of Rs 9,300 crore in 2022.

The buyback covers 10 crore fully paid-up shares of Rs 5 each, representing 2.41% of the company’s total equity. Infosys shares surged nearly 4% to Rs 1,541, leading the Nifty IT index, which climbed almost 3% to 36,970.85.

What is a Share Buyback?

A share buyback is when a company repurchases its own shares from shareholders. Infosys’ buyback price of Rs 1,800 per share represents a premium of over 19% compared to the price when it was announced in September.

Categories and Entitlements

The buyback is split into two categories: small shareholders and the general category. Small shareholders—those holding shares worth up to Rs 2 lakh—have a 15% reservation, ensuring a favorable entitlement. The record date for eligibility was November 14. The buyback ratio for small shareholders is 2:11, while for the general category, it is 17:706.

Why Retail Investors Stand to Benefit

Promoters and promoter groups, holding 14.3% of Infosys, have opted out of the buyback. This improves the acceptance ratio for public shareholders, especially retail investors, potentially enhancing their effective gains.

Infosys co-founders and family members collectively hold around 4% of the company. By staying out of the buyback, they signal confidence in the company’s long-term prospects, boosting investor sentiment in the IT sector.

Tax and Financial Considerations

Buyback proceeds are now taxed as dividends in shareholders’ hands. While high-tax investors may find selling shares in the market more efficient, those in lower tax brackets could gain from tendering their shares. Infosys is funding the buyback entirely through internal cash reserves, reflecting strong free cash flow and financial stability.