Infosys Buyback: All You Need To Know About IT Giant's First Share Repurchase In Three Years

Infosys Buyback: Infosys Ltd. will consider first buyback in three years on Thursday. The company may spend Rs 13,560 crore in the buyback, according to analysis by NDTV Profit. The buyback has been priced at an average premium of 25%, according to data compiled by NDTV Profit.

On average, Infosys spends 30% cash on buyback. It buys back 14–15% of net-worth. First quarter-cash and cash equivalents are at Rs 45,200 crore, while its net worth is at Rs 95,350 crore. The tech giant did its last buyback in Oct. 2022.

Infosys had conducted four buybacks from 2017 to 2023. The current buyback may provide a cushion to macroeconomic volatility. The share buyback is a part of the policy of capital return Infosys announced in the fourth quarter of financial year 2024.

The IT major is expected to return 85% of free cash flow cumulatively over a five- year period through a combination of semiannual dividends, share buybacks or special dividends, Morgan Stanley said. The brokerage is expecting 1.3–2% share buyback of total equity.

The consensus target price for Infosys is at Rs 1,743, which implied a 21.6% upside. The highest target price is at Rs 2,085 apiece, which implied 45.5% upside. The lowest target price is at Rs 1,440 apiece which implied a 0.5% upside.

This is also the first buyback from a leading IT company in last two years. Tata Consultancy Services Ltd. and Wipro India Ltd. have done five buybacks from 2016 to 2023.

IT stocks have come under pressure because of the worsening global macroeconomic situation due to tariff tensions. On year-to-date basis, the NSE Nifty IT is the worst performing sectors. The index has slumped 21%.

Infosys share price has lost 24% of its value on year-to-date basis. It ended 0.59% down at Rs 1,436 apiece on Monday.

Infosys has underperformed most large-cap peers over the past six months. Now with the potential buyback, the stock will likely find support, given the inexpensive valuation, Morgan Stanley said.

Infosys share price may rise relative to the country index over the next 60 days, the brokerage said. The buyback also signals stability and reiteration of its annual revenue and margin guidance in coming results. Morgan Stanley remained equal weight on the stock.