India's second-largest IT firm on September 11 approved a share buyback proposal worth Rs 18,000 crore for Rs 1,800 per share, the company said in a statement.
The share buyback program does not exceed 25 percent of the aggregate paid-up capital and accounts for 2.41 percent of the company, the statement added.
The Bengaluru-based IT major had cash and cash equivalents of over Rs 42,000 crore and free cash flow of over Rs 20,000 crore in FY25, giving it ample headroom for shareholder payouts. The buyback will be funded from its free reserves, in line with its capital allocation policy of returning 85 percent of free cash flow over five years through dividends and repurchases.
This is nearly double the Rs 9,300 crore buyback in October 2022, when the company repurchased shares via the open market route at a maximum price of Rs 1,850 per share. In comparison, the 2019 buyback stood at Rs 8,260 crore, while in 2017, Infosys carried out a Rs 13,000 crore programme.
The stock of the company ended 1.51 percent lower at Rs 1,509.5 on BSE on Thursday ahead of the board meeting.
The move comes at a time when IT stocks, in general, along with Infosys, have been under pressure from weak global demand. Analysts expect the buyback to improve return ratios and earnings per share by shrinking the equity base, while providing support to the stock in the near term.
Infosys joins peers such as TCS and Wipro, which have cumulatively spent over Rs 1 lakh crore on share repurchases over the past decade.
The buyback is proposed to be made from all equity shareholders of the company as on the Record Date, to be announced later, on a proportionate basis through the tender offer route.
Centrum Broking has a buy rating on Infosys shares with a target price of Rs 1,942 per share.
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