As the record date for Infosys ₹18,000 crore share buyback is expected to be announced in the coming weeks, the company’s shares continue to trade sideways. Although the stock showed some strength in recent sessions, it still hovers near a six-month low.
The board approved the buyback proposal earlier in September, its first in nearly three years, which initially sparked a brief recovery in the stock. However, the momentum soon faded, with shares slipping to their lowest level since April last week.
Infosys is the first IT bellwether to announce a buyback since 2023, and the ₹18,000 crore program is also the largest in its history. The move comes at a time when the stock has been under prolonged pressure, having lost about 25% from its recent highs.
The buyback also comes at a time when global tech companies are channeling their capital towards AI innovation, even as debates around soaring valuations and a potential AI bubble continue.
In this article, we look at how Infosys’ stock performed following its previous buyback announcements and in the subsequent periods.
How did Infosys share price respond to previous buybacks?
Investor response to Infosys’ previous buyback programs has been mixed. The Bengaluru-based IT major has announced four buybacks over the past eight years, with 2017 marking its first repurchase program involving more than 113 million shares.
In 2019, the company bought back 110 million shares, followed by over 55 million shares in 2021. The most recent buyback came in December 2022, when Infosys repurchased 60 million shares through the open market.
During the 2017 and 2021 buybacks, the company’s shares reacted negatively in the short-term following the announcement but recovered in subsequent months, delivering positive returns, as per the data compiled by the Mint.
Following its first repurchase announcement in August 2017, the stock came under pressure, closing the month with a 10% drop and declining another 2% in the following month. However, it recovered strongly thereafter, closing 11 out of the next 12 months in the green.
Similarly, the stock initially reacted negatively to the April 2021 buyback, ending the month 1% lower before resuming its uptrend, posting gains in six of the subsequent eight months.
In contrast, both the 2019 and 2022 buybacks delivered gains in the short and medium term. In 2019, the stock ended January with a 13.75% gain and continued to rally in the following months to hit a fresh all-time high.
During 2022, when the buyback was announced in October, the stock closed the month with an 8.79% gain, followed by another 6.33% rise in November, before entering a prolonged six-month sell-off.
Infosys bought shares back at over a 24% average premium
Across its last four buyback programs, Infosys has repurchased shares at an average premium of more than 24.5%. In 2017, the company bought back shares at a 25% premium, followed by an 18% premium in 2019. The 2021 buyback was executed at a 25% premium, while the 2022 program saw the highest premium so far—around 30%.
Nearly ₹40,000 crore spent on buybacks
Over the four buyback cycles, Infosys has spent nearly ₹39,760 crore in total repurchasing its own shares. The company spent ₹13,000 crore in 2017 through a tender offer at an average price of ₹1,150 per share. The second-largest program came in 2022, worth ₹9,300 crore, followed by ₹9,200 crore in 2021.
In 2019, the tech major spent ₹8,260 crore to repurchase shares, bringing the total cumulative buyback value to approximately ₹41,000 crore.
Infosys share buyback details
Infosys will repurchase up to 10 crore equity shares, representing 2.41% of the paid-up equity share capital of the company. The buyback price was set at ₹1800 per share. The Infosys share buyback offer is open to all shareholders, with 15% reserved for small investors.
The buyback will be conducted through the tender offer route on NSE and BSE, and the tender window will remain open for five working days once announced.
Meanwhile, Infosys has confirmed that its promoters and promoter group, including Nandan M Nilekani and Sudha Murthy, have decided not to participate in the company’s biggest buyback in its history.
Disclaimer: This story is for educational purposes only. 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.
