Post by : Raman

Infosys, India’s second-largest IT company, surprised investors with its largest-ever share buyback program worth Rs 18,000 crore. The announcement led to a jump of over 2 percent in the company’s share price on September 12. Early trading saw Infosys shares at Rs 1,539.90 each, reflecting investor enthusiasm over the buyback.

Understanding the Buyback

A share buyback is a program where a company buys back its own shares from existing shareholders. This helps the company return money to shareholders, reduce the number of shares in the market, and often supports the stock price. Infosys has set the buyback price at Rs 1,800 per share, which is about 19 percent higher than the stock’s previous closing price of Rs 1,509.70.

The buyback will cover up to 25 percent of the company’s paid-up capital, amounting to 2.41 percent of total shares. This is the first time Infosys has announced a buyback since 2022, when it had approved a Rs 9,300 crore buyback. The company has not yet announced the record date for this program.

Financial Strength Supports Buyback

Infosys has a strong financial position, with cash and cash equivalents exceeding Rs 42,000 crore and free cash flow of over Rs 20,000 crore in FY25. The buyback will be funded from the company’s free reserves, following its policy of returning 85 percent of free cash flow to shareholders over five years through dividends and share repurchases.

This financial strength gives Infosys room to reward shareholders while continuing to invest in its business. Analysts see the buyback as a positive sign, indicating confidence in the company’s stability and future growth.

Market Reaction and Stock Performance

Infosys shares have performed well in recent weeks. Over the past five days, shares gained more than 6 percent, while in the past month, they rose over 8 percent. However, the stock has faced challenges over the longer term, falling nearly 3 percent over the past six months and down more than 18 percent in 2025 so far.

The buyback announcement helped boost investor confidence. Analysts believe the move may support the stock price during the weak second half of FY26, helping to counter uncertainty in the market.

Expert Opinions on Buyback

Several international brokerages have provided insights on Infosys following the buyback announcement:

• CLSA has an “Outperform” rating with a target price of Rs 1,861 per share, implying more than 23 percent upside from the previous closing price.

• Nomura has a “Buy” rating with a target of Rs 1,880, suggesting over 24 percent potential gain. They expect the company’s constant currency revenue to grow 3.8 percent in FY26.

• Morgan Stanley maintains an “Equal-weight” rating with a target of Rs 1,700, indicating about 13 percent upside. They noted the buyback was larger than expected, signaling confidence despite macro uncertainties like Trump-era tariffs.

Company Performance Highlights

In the first quarter of FY26, Infosys reported strong financial results. Consolidated net profit rose 8.7 percent year-on-year to Rs 6,921 crore, beating expectations. Revenue increased 7.5 percent on-year to Rs 42,279 crore.

The company also revised its revenue growth forecast for FY26, expecting 1–3 percent growth in constant currency terms, up from the previous 0–3 percent guidance. Operating margin guidance remains at 20–22 percent. These figures reflect the company’s steady performance despite a challenging global IT environment.

Why This Buyback Matters

This Rs 18,000 crore buyback is significant for several reasons. It is the largest in Infosys’ history, showing the company’s strong financial position. It also provides shareholders with immediate returns and may improve the company’s stock valuation by reducing the number of shares in circulation.

The buyback comes at a time when global markets face uncertainty. By returning cash to shareholders, Infosys sends a message of stability and confidence in its business model. It also demonstrates the company’s commitment to its capital allocation policy, ensuring that excess cash is used to reward shareholders efficiently.

Infosys’ record share buyback of Rs 18,000 crore is a major development for the company and its investors. The move reflects the firm’s financial strength, strong free cash flow, and commitment to rewarding shareholders. Market reactions and expert analyses suggest the buyback will support stock prices and investor confidence in the coming months.

For investors, this announcement is a signal to watch the stock closely. While Infosys faces global IT sector challenges, the company’s solid financials, steady revenue growth, and strategic buyback program make it an attractive option for those looking to invest in India’s top IT firms.

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