Infosys announces record ₹18,000cr share buyback: Should you participate?
What's the story
IT giant Infosys has announced its biggest-ever share buyback worth ₹18,000 crore. The company will repurchase up to 10 crore shares or 2.41% of its paid-up capital at a price of ₹1,800 per share. This is an 18.1% premium over Friday's closing price of ₹1,524. The record date for eligibility is yet to be announced.
Buyback details
First-ever buyback through tender route
This is Infosys's first-ever buyback through the tender route since its maiden buyback in 2017. The company will repurchase shares from all equity shareholders as on the record date, including those who become equity shareholders on that date. The move comes as part of Infosys's capital allocation policy to return 85% of free cash flow to shareholders over FY25-29. It could take 3-4 months for the share repurchase program to get fully executed.
Expert opinions
Market experts welcome Infosys's decision
Market experts have welcomed Infosys's decision to buy back shares. Seema Srivastava, Senior Research Analyst at SMC Global Securities, said the buyback price is a significant premium over the current market price. "Importantly, 1.5 crore shares are specifically reserved for retail shareholders, making the offer particularly attractive for them," she said.
Additional details
Acceptance ratio and tax implications
The acceptance ratio for the buyback is expected to be low due to heavy oversubscription. Retail shareholders are likely to see a 6-20% acceptance ratio. From a tax perspective, shares accepted in the buyback will attract capital gains tax depending on the shareholder's applicable slab. Shares not accepted will remain in their demat account for long-term appreciation or market sale at prevailing prices.