Infosys share buyback: Window open from today; details of Rs 18,000-crore offer

Kolkata: Infosys, the second biggest IT services company of the country has set in motion its buyback programme, which begins today Nov 20 and will remain open till Nov 26. At Rs 18,000 crore, this is the biggest share buyback programme by the company. As announced the company will buy the shares at a price of Rs 1,800 from any shareholder who held its shares as on Nov 14, the record date.

Stock buybacks are designed to deliver some specific objectives. These programmes give cash to shareholders, push up EPS (earning per share) and communicate to the market that the management is confident about the future of the company and business. As demonstrated in the present case too, stock buybacks raise the price of a share in the market and often serves as another way of rewarding the shareholder as an alternative to the more common dividends.

The company intends to buy back 10 crore fully paid-up equity shares each of which carries a face value of Rs 5. It represents up to 2.41% of the paid-up equity share capital of the company. Predictably, the buyback triggered 3.74% rally of the stock that reached Rs 1,541.25 on the BSE. At NSE, the Infosys stock went up 3.74% to touch Rs 1,542. The market cap of the company surged by as much as Rs 23,098.48 crore to reach Rs 6,40,297.11 crore.

Infosys has stated in a regulatory filing: "The eligible shareholders can tender their equity shares during the tendering period, i.e. from November 20, 2025, to November 26, 2025.... The buyback is being undertaken by the company after taking into account the strategic and operational cash needs of the company in the medium term and for returning surplus funds to the shareholders in an effective and efficient manner in line with its capital allocation policy."

The Infosys buyback scheme is divided into two categories -- reserved (for small shareholders) and a general category. The reservation for small shareholders will be applicable to 15% of the number of equity shares that the company wants to buy back, or their entitlement, whichever is higher.

But who is a small shareholder? A small shareholder has been defined as an individual who holds shares equal to or below the value of Rs 2 lakh as found on the record date -- in this case Nov 14. There are 25,85,684 small shareholders of Infosys, according to records. Infosys appointed Kotak Mahindra Capital Company as the manager to the buyback and KFin Technologies is the registrar to the issue.