Infosys Buyback: The IT services giant’s share buyback programme worth ₹18,000 crore, the largest-ever in the company’s history, opens for subscription today, November 20. Eligible investors have five trading days to tender shares in the Infosys buyback. As per the timeline, Infosys share buyback window will remain open till November 26.
Infosys buyback record date for the purpose of determining the names of the eligible shareholders was November 14. Hence, only those shareholders are eligible to tender shares in the Infosys share buyback who held the company’s shares in their demat accounts on November 14.
Infosys Buyback Details
Infosys plans to repurchase 10 crore fully paid-up equity shares of a face value of ₹5 each, representing up to 2.41% of the total paid-up equity share capital. Infosys buyback price is set at ₹1,800 per share.
Infosys buyback includes a reservation for small shareholders that will be 15% of the number of equity shares that the company proposes to buy back, or their entitlement, whichever is higher. Infosys had 25,85,684 small shareholders who held shares worth not more than ₹2 lakh.
Infosys promoters and promoter group, including Nandan M Nilekani and Sudha Murty, will not participate in the company’s buyback programme. The promoters collectively held 13.05% stake in the IT major on the buyback announcement date.
The ratio of share buyback from the reserved category is 2:11, that is, 2 equity shares for every 11 equity shares held. Infosys share buyback ratio for the general category is 17:706.
The buyback acceptance ratio shows how many shares of shareholders will be accepted by the company for buyback, relative to the number of shares they hold.
Should you tender shares in Infosys buyback?
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, says Infosys buyback is an attractive opportunity for retail investors to tender shares as buyback price is at a decent premium.
“Infosys buyback would be only attractive if investors fall in a lower income slab. Long term conservative investors need not worry to hold. While short term investors can calculate the tax and participate in the tender,” Tapse said.
According to Abhinav Tiwari, Research Analyst at Bonanza, since Infosys promoters are not participating, the acceptance ratio for public shareholders, particularly retail, should be relatively high, improving the effective realized upside.
Infosys Buyback: Tax Considerations
Tapse believes that taxation is a major drag in Infosys share buyback if investors are in the higher tax slabs. This is because the entire buyback amount is taxable, and the tax payable could substantially reduce net gains, especially for investors in higher tax brackets as Infosys will deduct tax at source when paying out the buyback consideration.
“So net proceeds will already be lower than ₹1,800 × accepted shares. This buyback would be only attractive if investors fall in a lower income slab,” said Tapse.
Abhinav Tiwari explained that share buybacks are now taxed as “deemed dividend”, meaning the payout is fully taxable at the shareholder’s slab rate.
“For investors in the 30%+ surcharge bracket, the net benefit from the premium sharply reduces, often making a market sale near the buyback price more efficient. For lower tax bracket investors, the tender route still delivers clear incremental value,” Tiwari said.
However, a critical factor is Infosys’ balance sheet strength. The company is funding the buyback entirely through internal cash and reserves, underscoring its strong free cash flow generation.
“Infosys buyback partially offsets slower EPS growth by reducing share count and improving ROE which is supportive for long term holders who do not tender,” said Tiwari.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
