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 the uninitiated, A share buyback (or share repurchase) is when a company purchases its own shares from existing shareholders. 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 crores via open market at a cap of ₹1,850 per share. The upcoming ₹13,560 crores 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 crores (2017) to ₹18,000 crores (2022), often via the tender route. Wipro’s buybacks have been smaller, averaging ₹10,000 crores. 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.

The table given below captures the key details of this buyback:

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 sizable 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.

Eligibility and Participation: Whwo Can Participate?

All shareholders holding Infosys equity shares in their Demat or physical form as of November 14, 2025 (Record Date) are eligible. The buyback offers special benefits to small shareholders through a 15% reservation. Small shareholders are those whose total shareholding value is ₹2 lakhs or less on the record date.

Small shareholders receive the higher of:

• Their proportionate entitlement

OR

• 15% of the total shares being bought back

This ensures better acceptance ratios for retail investors.

How to Participate in Infosys Buyback?

To participate:

➔ Step 1: Hold Shares on Record Date

Ensure Infosys shares are in your Demat account by November 14, 2025 (You need to buy and hold the shares on 13th November).

➔ Step 2: Submit Your Tender

The buyback window will be declared by the company.

• Login into Kotak Neo.
• Select ‘Invest Option’ in bottom left corner
• Navigate to the buyback section
• Select Infosys and submit your tender offer

➔ Step 3: Await Acceptance

Since only 2.41% of shares are being bought back, not all tendered shares will be accepted. The acceptance ratio determines how many of your shares will be purchased.

➔ Step 4: Receive Payment

Accepted shares will be credited with payment, and unaccepted shares will be returned to your demat account.

Should Retail Investors Participate?

The buyback gives existing shareholders a chance to sell shares at a premium. Also, retail investors can benefit from a higher acceptance ratio, thanks to the dedicated reservation of this category. That said, as an investor, you should remember that buyback acceptance is not guaranteed.

Since only 2.41% of shares are being bought back, your entire tender may not be accepted. Unaccepted shares will be there in your Demat account and get exposed to market volatility upon the ending of the tender period.

Taxation is another key consideration. Under the current rules, in a buyback there is no tax on the company. The amount received is treated as taxable income in the hand of the shareholder. The amount received is treated as ‘deemed dividend’ under Section 2(22)(f) and taxed at your income tax slab rate. If you are in the higher tax slab, this can reduce your net gains.

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 crores in Q1 FY2026, marking an 8% year-on-year increase, while net profit rose 9% to ₹6,921 crores. In Q2 FY2024, revenue stood at ₹38,994 crores, with profit after tax at ₹6,215 crores. The company’s cash and cash equivalents as of Q1 FY2026 were ₹45,200 crores, supporting its ₹13,560 crores 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.

Additional Sources

• Livemint
  
• India Today