Infosys Launches Rs 18,000 Crore Buyback, Stock Gains 3%
Infosys, India’s second-largest IT firm, saw its shares surge 3% on November 20 after announcing a massive Rs 18,000 crore share buyback at Rs 1,850 per share—a 30% premium over its November 19 closing price. The move highlights the company’s strong cash reserves and commitment to shareholder returns.
Why Is Infosys Stock Rising?
- Premium Pricing: Buyback priced at Rs 1,850/share vs. ~Rs 1,690 market price.
- Scale: Covers 9.7 crore shares (2.36% of equity), marking Infosys’ largest buyback since 2017.
- Investor Confidence: CEO Salil Parekh cited robust financials, with Q2 FY24 net profit at Rs 6,212 crore and 6.7% YoY revenue growth.
Timing and Sector Trends
The buyback aligns with IT firms leveraging cash reserves amid sluggish global demand. Infosys has now conducted four buybacks in six years, including:
– 2017: Rs 13,000 crore
– 2019: Rs 8,260 crore
– 2021: Rs 9,200 crore
Analyst Reactions
- Bullish View: Bernstein India praised the premium pricing as a sign of management confidence.
- Caution: Revised FY24 revenue guidance (1–2.5% growth) reflects deal delays, raising long-term execution concerns.
Should Investors Tender Shares?
- Pros: Short-term gain (Rs 1,850 vs. current ~Rs 1,690).
- Cons: Tax implications (20% with indexation for long-term holdings; 15% for short-term).
“Evaluate opportunity costs—holding for growth vs. tendering at a premium.” — Shreya Kapoor, Financial Advisor
Broader Market Impact
Rivals like TCS (Rs 18,000 crore buyback in 2023) and Wipro may face pressure to boost shareholder payouts.
What’s Next for Infosys?
- Focus on cost optimization and digital transformation deals.
- Sustaining growth amid macro uncertainty remains key.
Bottom Line: The buyback delivers immediate gains, but Infosys’ ability to secure large deals will determine long-term momentum.
