Infosys has announced a massive ₹18,000 crore share buyback, its biggest ever. The move has drawn the attention of investors, analysts, and the entire IT sector. Buybacks are often seen as a sign of confidence from management and can influence how a company’s shares perform in the short and long term. To understand whether this initiative will boost Infosys’ share price, it is important to look at the details of the buyback, the immediate market reaction, expert opinions, and the risks that come along with it.
The company has planned to repurchase shares worth ₹18,000 crore through the tender offer route. The buyback price has been set at ₹1,800 per share, which is about 19 percent higher than the share price before the announcement. A total of 10 crore shares will be repurchased, accounting for 2.41 percent of Infosys’ paid-up equity capital.
This buyback complies with regulations and is well within the limit of 25 percent of the paid-up capital and free reserves, which is the maximum allowed by the Securities and Exchange Board of India. It reflects Infosys’ strong financial position and the ability to generate cash flows that are large enough to return to shareholders without straining operations.
The announcement of the buyback gave Infosys shares an immediate push. On the Bombay Stock Exchange, the stock rose by around 2.3 percent, reaching ₹1,544.65 compared to the previous day’s closing of ₹1,512. The impact was also visible on the broader indices, as Infosys’ weight in the IT sector helped lift overall market sentiment.
This response shows that investors welcomed the buyback news. It also highlights how markets tend to react positively when companies show a willingness to return money to shareholders, especially when the offer is at a significant premium to the market price.
A share buyback reduces the total number of outstanding shares. If profits remain stable, the earnings per share (EPS) automatically rise. For Infosys, analysts estimate that the buyback could lift EPS by around 3 to 5 percent. A higher EPS usually translates into better valuation metrics, which in turn supports the share price.
The buyback also creates an arbitrage opportunity for shareholders. Those who are eligible to tender shares will receive ₹1,800 per share, which is higher than the current market price. This ensures an immediate financial gain for many shareholders. At the same time, the reduced share count can provide long-term valuation support by signaling confidence in the company’s performance.
The scale of this buyback sends a strong message that Infosys management is confident about future growth and steady cash flows. In an environment where global IT spending is under pressure and many companies are cutting back on technology investments, such a bold move demonstrates the company’s resilience.
It also aligns with Infosys’ broader capital allocation strategy, which is to return nearly 85 percent of its free cash flow to shareholders through a combination of dividends and buybacks. This consistency builds trust and reassures investors that shareholder value remains a priority even during uncertain times.
Brokerages have responded with optimism to Infosys’ announcement. Nomura has maintained a “Buy” rating on the stock and raised its target price to ₹1,880. CLSA has also remained positive with an “Outperform” rating, setting its target at ₹1,861. Morgan Stanley has taken a more balanced view, giving the stock an “Equal Weight” rating with a target price of ₹1,700, while still acknowledging the strength of Infosys’ free cash flows.
The fact that leading global brokerages have either upgraded or maintained their positive outlooks indicates that the buyback is expected to create a support floor for the share price in the coming months.
The Indian IT sector has recently faced large foreign portfolio outflows. In July, foreign investors pulled out nearly ₹19,901 crore from the sector, followed by another ₹11,285 crore in August. This has weighed heavily on IT shares, including Infosys.
The buyback could help balance some of this pressure by showing that Infosys is committed to protecting shareholder value. When institutional investors see management taking such steps, it can change sentiment and slow down the pace of selling.
The buyback announcement does not just affect Infosys but also impacts the IT sector as a whole. As one of India’s largest technology companies, Infosys sets a tone for the industry. A strong move like this can give confidence to investors across IT stocks and help lift valuations of peers.
Additionally, buybacks are often interpreted as a way to put a floor under the stock price. In other words, it becomes less likely for the share price to fall below a certain level because investors expect ongoing support from management. This effect can create stability in volatile markets.
While buybacks offer many benefits, they also come with risks and limitations. The size of this buyback, though large in rupee terms, covers only 2.41 percent of Infosys’ equity. This means the long-term impact on supply and demand may not be very large.
Execution is another factor to consider. The buyback requires shareholder approval and must comply with global regulatory rules, especially since Infosys also has American Depository Shares traded in the United States. Any delay or complication could affect investor confidence.
Another concern is the opportunity cost. The ₹18,000 crore being used for the buyback could have been invested in research, acquisitions, or new technology areas like artificial intelligence and cloud solutions. In a highly competitive industry, spending on innovation is crucial, and critics may argue that Infosys should have allocated more funds toward long-term growth.
Global uncertainties also remain a challenge. Weak IT demand, currency fluctuations, and margin pressures are beyond Infosys’ control. A buyback can boost short-term sentiment but cannot solve structural issues in the global technology market.
Historically, Infosys has completed its buybacks over a period of three to four months. This suggests that the impact will be spread out gradually, rather than being felt all at once. During this time, share price momentum may remain strong as investors react to both the buyback and the premium offered.
Longer-term performance, however, will still depend on how well Infosys grows its business. Revenue growth, deal wins, cost management, and global technology demand will continue to play a far bigger role than financial engineering alone.
Infosys’ ₹18,000 crore share buyback is a bold step that underlines the company’s financial strength and confidence in its future. The immediate market reaction has been positive, and analysts believe the move could support the share price in the near term. Higher earnings per share, premium pricing, and improved investor sentiment are all factors that point toward a boost in valuation.
At the same time, the buyback is not a guarantee of long-term share price growth. It reduces equity only marginally and does not address deeper challenges like slowing global IT demand or the need for continuous innovation. For shareholders, the buyback represents both an opportunity for short-term gains and a signal of management’s commitment to returning value.
The real test for Infosys will lie in its ability to balance capital returns with investments in future growth. If the company succeeds on both fronts, the buyback will not only support the share price today but also help strengthen its position in the global technology market for years to come.