Infosys buyback opens. Should you tender shares in ₹18,000-crore offer?

Infosys Buyback: The IT services giant Infosys' share buyback programme, worth ₹18,000 crore — the largest-ever in the company’s history — opened for subscription on November 20. Eligible investors have four trading days remaining to tender shares in the Infosys buyback. According to the timeline, Infosys' share buyback window will remain open until November 26.

Infosys buyback record date for the purpose of determining the names of the eligible shareholders was November 14. Hence, only those shareholders are eligible to tender shares in Infosys share buyback who held the shares in their demat accounts as of November 14.

Infosys Buyback Details

Infosys plans to repurchase 10 crore fully paid-up equity shares of a face value of ₹5 each, representing up to 2.41% of the total paid-up equity share capital. Infosys buyback price is set at ₹1,800 per share.

It includes a reservation for small shareholders that will be 15% of the number of equity shares that the company proposes to buy back, or their entitlement, whichever is higher. Infosys had 25,85,684 small shareholders who held shares worth not more than ₹2 lakh.

Infosys promoters and promoter group, including Nandan M Nilekani and Sudha Murty, will not participate in the company’s buyback programme. The promoters collectively held a 13.05% stake in the IT major on the buyback announcement date.

The ratio of share buyback from the reserved category is 2:11, meaning that investors can tender two equity shares for every 11 equity shares held. Infosys share buyback ratio for the general category is 17:706.

The buyback acceptance ratio shows how many shares held by the shareholders will be accepted by the company for buyback, relative to the number of shares they hold.

Should you tender shares in Infosys buyback?

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, says the Infosys buyback is an attractive opportunity for retail investors to tender shares as the buyback price is at a decent premium.

“Infosys buyback would be only attractive if investors fall in a lower income slab. Long-term conservative investors need not worry about holding. While short-term investors can calculate the tax and participate in the tender,” Tapse said.

According to Abhinav Tiwari, Research Analyst at Bonanza, since Infosys promoters are not participating, the acceptance ratio for public shareholders, particularly retail, should be relatively high, improving the effective realised upside.

Infosys Buyback: Tax Considerations

Tapse believes that taxation is a major drag on Infosys' share buyback if investors are in the higher tax slabs. This is because the entire buyback amount is taxable, and the tax payable could substantially reduce net gains, especially for investors in higher tax brackets.

“So net proceeds will already be lower than ₹1,800 × accepted shares. This buyback would be only attractive if investors fall in a lower income slab,” said Tapse.

Tiwari explained that share buybacks are now taxed as “deemed dividend”, meaning the payout is fully taxable at the shareholder’s slab rate.

“For investors in the 30%+ surcharge bracket, the net benefit from the premium sharply reduces, often making a market sale near the buyback price more efficient. For lower tax bracket investors, the tender route still delivers clear incremental value,” Tiwari said.

However, a critical factor is Infosys’ balance sheet strength. The company is funding the buyback entirely through internal cash and reserves, underscoring its strong free cash flow generation.

“Infosys buyback partially offsets slower EPS growth by reducing share count and improving ROE, which is supportive for long-term holders who do not tender,” said Tiwari.

At 10:00 AM, Infosys share price was trading 0.21% lower at ₹1,538.00 apiece on the BSE.

Disclaimer: 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.