Infosys Announces ₹18,000 Cr Buyback at 19% Premium in 2025

Infosys Ltd., India’s second-largest IT services company, has made headlines yet again by announcing its biggest-ever share buyback—a move that underlines its strong balance sheet and commitment to rewarding shareholders. The repurchase will be carried out at a 19% premium to its latest closing price, making it one of the most significant corporate actions in the Indian IT sector this year.

Infosys’ ₹18,000-Crore Buyback: Key Highlights

Buyback Size: ₹18,000 crore
Number of Shares: 10 crore fully paid-up equity shares
Face Value per Share: ₹5
Buyback Price: ₹1,800 per share
Stake Percentage: Equivalent to 2.41% of the company’s equity
Premium: 19% over closing price of ₹1,509.50 (September 11, 2025)
Mode: Tender offer route (open market buybacks phased out by SEBI)
Record Date: To be announced later

The company clarified in its filing that the buyback size does not exceed 25% of aggregate paid-up capital and free reserves, as mandated by SEBI regulations.

Financial Strength Behind the Buyback

Infosys has long followed a policy of returning a substantial portion of free cash flow to shareholders. Despite a 17.7% year-on-year decline in free cash flow, the company remains financially robust.

Free Cash Flow (Q1 FY26, ended June 30, 2025): ₹7,533 crore (108.8% of net profit)
Cash & Investments (as of June 30, 2025): ₹45,204 crore
FY25 Free Cash Flow: Over ₹20,000 crore
Cash and Equivalents FY25: Over ₹42,000 crore

Funding the buyback through free reserves, Infosys reaffirmed its capital allocation policy of returning 85% of free cash flows to shareholders over a five-year period via dividends and repurchases.

Infosys’ Buyback History

This is only the fourth buyback in Infosys’ history since its founding by N.R. Narayana Murthy in 1981 and its listing in 1993. Previous buybacks include:

2017: First-ever buyback of 11.30 crore shares at ₹1,150 per share, totaling ₹13,000 crore.
2019: Repurchased 11.05 crore shares via open market at an average price of ₹747.38, totaling ₹8,260 crore.
2021: Bought back shares worth ₹9,200–9,300 crore through open market transactions at prices between ₹1,750 and ₹1,850.
2025: The current buyback, at ₹18,000 crore, surpasses all previous programs, underscoring its scale and significance.

Notably, SEBI has phased out the open market mechanism, making the tender offer the only available route for such corporate actions.

Market Reaction and Stock Performance

Interestingly, despite the announcement, Infosys’ stock slipped 1.51% to ₹1,509.50 on the BSE on September 11, 2025, while the benchmark Sensex closed 0.15% higher at 81,548.73 points. However, the buyback news was released after market hours, and the stock jumped more than 2% intraday following the disclosure.

Recent Stock Performance:

Past 5 Days: +6%
Past 1 Month: +8%
Past 6 Months: -3%
Year-to-Date (2025): -18%

The mixed movement reflects investor caution amid global uncertainties, even as analysts believe the buyback could act as a price stabilizer in the near term.

Analyst and Brokerage Reactions

Market analysts have responded positively, with global brokerages revising their calls on the stock:

CLSA: Outperform rating with a target price of ₹1,861, implying a 23% upside from the previous close. CLSA expects the buyback to support the stock during a challenging second half of FY26.
Nomura: Buy rating with a target price of ₹1,880, implying a 24% upside. Nomura forecasts Infosys’ constant currency revenue growth at 3.8% year-on-year in FY26.
Morgan Stanley: Equal-weight rating with a target price of ₹1,700, offering a 13% upside. The brokerage noted the buyback size exceeded expectations (₹10,000–14,000 crore) and viewed it as a vote of confidence in Infosys’ FY26 guidance amid global macro uncertainties, including Trump tariffs.

Regulatory and Global Considerations

Infosys confirmed in its September 12 filing that it will receive certain exemptive relief from the U.S. Securities and Exchange Commission (SEC) due to conflicting regulatory requirements between Indian and U.S. laws for tender offer buybacks.

This ensures that the program remains compliant across jurisdictions, which is crucial given Infosys’ large global investor base.

Why Buybacks Matter for Shareholders

For Infosys’ 26 lakh shareholders, this buyback could mean several things:

Higher Value Per Share: With fewer shares in circulation, earnings per share (EPS) generally improve.
Premium Return: At ₹1,800, shareholders get a 19% premium over the last traded price.
Confidence Boost: Buybacks often signal that management believes the stock is undervalued.
Stability During Volatility: Especially relevant in a year where Infosys’ stock has seen an 18% drop.

Final Takeaway

Infosys’ ₹18,000-crore buyback is not just the largest in its history but also a strategic move to return value to shareholders and instill market confidence amid global uncertainties. Backed by strong cash reserves, disciplined capital allocation, and a long-term shareholder return policy, this buyback reflects the IT giant’s resilience and commitment.

For investors, the move signals that Infosys is betting on its own strength—even in a challenging market environment. With analysts projecting healthy upside and the company continuing to generate robust free cash flows, the buyback could be a game-changer for shareholder wealth in FY26 and beyond.

With inputs from agencies

Image Source: Multiple agencies