Strategic Move Signals Confidence Amid Market Volatility
Introduction
Bhopal: Infosys Ltd., India’s second-largest IT services firm, announced its largest-ever share buyback of Rs 18,000 crore on September 11, 2025, offering a 19% premium at Rs 1,800 per share. This fifth buyback since 2017, approved during a board meeting, presents a compelling opportunity for investors, especially as the stock has underperformed, dropping 24% year-to-date.
Buyback Details and Benefits
The buyback, conducted via the tender offer route, targets 10 crore shares (2.41% of equity), funded from free reserves. This move enhances earnings per share (EPS) and return on equity (ROE), signaling management’s confidence in cash flows despite global IT spending pressures. For investors, the 19% premium offers an immediate arbitrage opportunity, while long-term holders benefit from reduced share dilution and potential stock re-rating. With Infosys holding Rs 42,000 crore in cash as of FY25, the buyback aligns with its policy of returning 85% of free cash flow to shareholders.
Market Context and Investor Sentiment
The announcement triggered a 5% intraday surge on September 9, though profit-booking saw the stock close 1.3% lower at Rs 1,512 on September 11. Analysts note that the stock’s forward P/E of 20.8x, below its five-year average of 24.8x, suggests undervaluation. The tax implications post-April 2024, where shareholders bear the burden, may affect retail participation.
Why It’s a Good Time
With festive season demand and potential US rate cuts boosting sentiment, the buyback could propel Infosys stock toward Rs 1,800-1,900 in the near term. For long-term investors, the company’s Rs 1,36,592 crore revenue in FY25 and 21.1% operating margin provide a strong foundation. Experts recommend holding or accumulating shares, though caution is advised due to global uncertainties.
Conclusion
Infosys’ buyback offers a strategic entry point for investors. Balancing short-term gains with long-term growth potential, it underscores a resilient investment amid market volatility.
