Investors will closely track for updates as the board of IT major Infosys convenes today to consider a proposal for share buyback, which will be the first one in three years, and fifth in last eight years.
Shares of the company opened quiet on September 11 but slipped nearly a percent lower to be the top loser on Nifty 50. The shares have gained 2.6 percent in last one week and 6.6 percent over last one month, while on a YTD basis, shares of Infosys are lower by 19 percent.
Market participants will be closely watching for the size of the buyback and how much of its cash reserves will the company deploy to purchases shares from investors. Also on radar will be the premium that the company will offer in order to buy back the shares. The timing of the buyback is also interesting, coming at a time for ongoing tariffs by US President Trump on Indian exports, and when the US economy has been facing risks of a slowdown, and amid calls of curb on US H1-B visas among Trump's supporters.
In a recent note, Morgan Stanley has said that it sees a buyback of around Rs 10,000-14,000 crore by Infosys, coming in at around 18-25 percent premium to the current price.
As of June 2025, Infosys was sitting on cash on books worth Rs 24,500 crore. Infosys has a high cash-generating business with access to global capital. The company's primary source of funds is cash from operations and income from short and long-term investments, among others.
"Our strong performance on the back of meticulous execution over the years, as reflected in the combination of high growth, strong cash generation and profitability, has led to building a strong, debt-free, and liquid Balance Sheet," the company had said in its annual report for FY25.
The company has returned nearly Rs 88,400 crore, or 85% of the cumulative free cash flow between FY20-24 through dividends and buybacks, as part of its capital allocation policy. During the year ended March 31, 2025, Infosys paid an interim dividend of Rs 21 per share and announced a final dividend of Rs 22 per share.
In the last five years preceding FY25, Infosys had purchased and extinguished a total of 11.62 crore fully paid-up equity shares from stock exchanges. The company has only one class of equity shares and even ADR holders are eligible for the buyback.
Motilal Oswal has a Neutral call on Infosys with a target price of Rs 1750, and Prabhudas Lilladher has an Accumulate call with the same target.
The IT space has not seen a buyback from the top-tier names in the last two years, and both Wipro and TCS are eligible to come out with their own, thus Infosys' board decision a closely watched by market participants. Both TCS and Wipro have conducted five buybacks each between 2016-2023, whereas Infosys has carried out four buybacks since 2017.
The IT services major had revised its full-year revenue growth guidance for FY26 to 1-3 percent growth in constant currency (CC), increasing the lower end of the range.
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