Infosys to Announce Billion-Dollar Share Buyback Plan Today

Infosys to Announce Billion-Dollar Share Buyback Plan Today: What to Expect and Could the Stock Rally?

Bengaluru: Infosys, one of India’s leading IT services companies, is set to announce a substantial share buyback plan—valued at around ₹10,000 to ₹15,000 crore (approximately $1.2 to $1.8 billion)—in a board meeting later today. This would mark the company’s first buyback in three years and the fifth since 2017. 

Buyback Expectations: Size, Premium, and Structure

According to market estimates, the proposed buyback is likely to involve:

• Size: ₹10,000–₹14,000 crore. 
• Premium: Approximately 18–25% above the prevailing market price, positioning it as a tender offer rather than an open market purchase. 
• Capital Source: Infosys had around ₹24,500 crore in cash reserves as of June 2025, making it comfortably able to fund this buyback from its balance sheet. 

Why It Matters: Shareholder Signal & EPS Impact

A share buyback typically signals management’s confidence in undervaluation and provides a direct return of capital to shareholders. The mechanics reduce the number of outstanding shares, boosting earnings per share (EPS) and potentially raising the stock’s valuation multiple.

Market participants see it as a strategic move to enhance shareholder value, especially at a time when Infosys shares have lost around 19% year-to-date.

Historical Precedents: How the Stock Reacted Earlier

Infosys’s past buybacks offer useful insights:

• 2017 & 2021 Buybacks: The stock initially slipped in the short term—down as much as 5.8% within a month—but eventually rebounded strongly, gaining 9% (2017) and 22% (2021) over six months.
• 2019 & 2022 Buybacks: These delivered positive outcomes both in the near term (5–7% gain in five days) and medium term (~10–11% in a month). 

This mixed but generally positive track record suggests that while initial reactions can be volatile, the medium-term performance tends to be favourable.

Market Sentiment & Broader Impact

Ahead of the announcement, Infosys shares fell around 1–1.3%—a sign of cautious investor anticipation Yet the broader IT sector rallied, with early reports of the upcoming buyback pushing the stock up ~5% and contributing to a ~2.8% gain in the sector. 

The move also comes at a time when IT valuations are under pressure—Infosys is down around 18–19% for the year as the Nifty IT index trails other sectors. A buyback may help restore investor confidence and support valuation multiples. 

Analyst Perspective & Valuation Context

Analyst notes highlight that Infosys’s strong cash generation, debt-free balance sheet, and disciplined capital return policy make the buyback an opportune move. Morgan Stanley expects the buyback may come at a premium of 18–25%, with the company likely to leverage its cash reserves. 

The broader context: Indian IT firms face challenges like visa restrictions, moderation in global IT spending, and currency shifts. Such buybacks can signal prudent capital allocation when growth is under pressure.

Will the Stock Rally?

• Short Term: Expect potential volatility. Initial market reaction could range from flat to a modest 3–5% uptick, driven by positive sentiment and headline impact.
• Medium Term (1–6 Months): Given historical buyback outcomes, a 10–20% gain is possible, provided business fundamentals remain stable and global tech demand improves. 
• Caveats: The effectiveness depends on execution, buyback pricing, and investor perception—especially if Infosys is seen as returning excess cash rather than investing in growth opportunities.

Summary Table