Infosys Buyback News: What It Means for Shareholders

Infosys has put a fresh buyback proposal on the table, marking what could be its 5th share repurchase since 2017. The company confirmed in a regulatory filing that the board will meet on 11 September 2025 to consider the move. For investors, buybacks not only offer a potential near-term premium but also signal management’s confidence in cash flows and long-term growth visibility.

Infosys has executed four buybacks since 2017, with the most recent in October 2022 worth ₹9,300 crore via open market at a cap of ₹1,850 per share. The upcoming ₹13,560 crore buyback marks its 5th, priced at a 25% premium. Infosys typically allocates 30% of its cash reserves for buybacks, targeting 14–15% of net worth. In contrast, Tata Consultancy Services and Wipro have conducted five buybacks each between 2016 and 2023.

TCS’s buybacks have ranged from ₹16,000 crore (2017) to ₹18,000 crore (2022), often via the tender route. Wipro’s buybacks have been smaller, averaging ₹10,000 crore. HCL Tech has opted for fewer repurchases, focusing more on dividends.

For Infosys’ 26 lakh shareholders, the buyback—if via the tender route—offers a chance to exit at a premium, while long-term investors benefit from improved EPS and higher return ratios. Analysts note that compared to dividends, buybacks are more tax-efficient for many retail investors.

Strategic Benefits of Buyback for Infosys

Infosys’ buybacks serve multiple strategic goals, such as:

• The company reduced outstanding shares, enhancing Earnings Per Share (EPS) and Return on Equity (ROE).

• Infosys had over 335,000 employees globally as of FY2023. A significant portion of compensation is equity-linked, especially for senior and mid-level staff. Buybacks help neutralise dilution from Employee Stock Option Plans (ESOPs) and Restricted Stock Units (RSUs), a strategy Infosys has consistently followed.

• Buyback signal undervaluation; Infosys stock fell 24% YTD in 2025, prompting management to act.

• Buybacks utilise surplus cash without committing to long-term capex. Infosys’ free cash flow in Q1 FY2026 was $884 million, enabling non-disruptive capital deployment.

• Buybacks offer tax-efficient shareholder returns compared to dividends, especially for long-term investors.

Infosys has historically used the open market route, avoiding promoter participation and ensuring broader retail benefit. These actions align with its capital allocation framework and reinforce investor confidence during volatile cycles.

Analysts highlight that Infosys’ decision to go for a sizeable buyback, despite global IT spending pressures, reinforces management’s confidence in sustaining strong cash flows. This not only supports valuations in the near term but could also re-rate the stock if margin pressures ease in the coming quarters.

Impact of Buyback on Shareholding Pattern and Promoters

As of June 2025, Infosys’ promoter holding stood at 14.61%, unchanged from the previous quarter, with zero pledged shares. Foreign Institutional Investors (FIIs) held 31.92%, down from 32.89% in March 2025, indicating cautious sentiment. Domestic Institutional Investors (DIIs) increased their stake to 39.6%, while mutual funds rose to 20.86%.

Infosys’ buybacks exclude promoter participation, ensuring no change in promoter control. This structure benefits public shareholders and institutional investors, who see improved per-share metrics post buyback. The tender route, if chosen, allows retail investors to exit at a premium.

For market participants, this structure provides clarity: public shareholders get a larger share of the buyback benefit, and promoters’ holdings remain unaffected, avoiding concerns of control dilution.

Decoding Infosys Financials

Infosys reported consolidated revenue of ₹42,279 crore in Q1 FY2026, marking an 8% year-on-year increase, while net profit rose 9% to ₹6,921 crore. In Q2 FY2024, revenue stood at ₹38,994 crore, with profit after tax at ₹6,215 crore. The company’s cash and cash equivalents as of Q1 FY2026 were ₹45,200 crore, supporting its ₹13,560 crore buyback proposal. Operating margins declined slightly to 20.8% in Q1 FY2026 from 21.1% in Q1 FY2025, reflecting macroeconomic headwinds.

Infosys revised its FY2026 revenue guidance to 1–3% in constant currency terms, indicating a cautious outlook amid global IT spending slowdown. Despite margin compression, the company maintains robust liquidity and consistent deal wins.

Conclusion

Infosys is once again considering a share buyback, which would be its fifth since 2017. The proposal follows a period of underperformance and may offer shareholders both direct financial reward and potential longer-term capital gains via EPS improvement. There is reasonable evidence of cash strength, and the company’s track record of returning value supports the move.

Yet the final outcome will matter: size, structure, and price premium will determine its real effect. For investors, the proposal offers both tactical opportunities—via the premium and possible tender participation—and strategic value through enhanced shareholder returns. The 11 September board meeting will be key in setting the tone for Infosys’ capital allocation and market sentiment going forward.

Sources

The Financial Express
Times Now
The Economic Times
NDTV Profit
Money Control
Business Standard
CMA Knowledge