Axis Securities assumes a situation where only 50% of small shareholders tender their shares. Under buyback rules, 15% of the total buyback size is reserved for shareholders holding up to Rs 2 lakh worth of stock, and in this case, that translates to 1.5 crore shares earmarked for the retail category. However, because the brokerage assumes only half the eligible investors will respond, the total number of shares competing for that slot drops to 13.8 crore. With fewer shares chasing a fixed quota, the acceptance ratio improves to 11%, meaning 11 out of every 100 shares tendered are likely to be accepted.
The math works out simply for shareholders. At today’s closing price of Rs 1,536, the difference between the market rate and the buyback price of Rs 1,800 is Rs 264 per share. So if an investor tenders 100 shares, Infosys would buy 11 of them at a Rs 264 premium, resulting in a direct gain of Rs 2,904 on those accepted shares. The remaining 89 shares stay in the investor’s demat account at the prevailing market price.
Axis argues that the real upside may emerge if the stock re-rates after the buyback. Under its model, if Infosys climbs to Rs 1,650 post-buyback, the 89 unaccepted shares alone would generate Rs 114 per share in gains from today’s price. Combined with the premium earned on the accepted shares, total returns for small shareholders could land in the 8–9% range over the next 3-4 months.
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In contrast, if the stock remains near current levels after the buyback closes, returns moderate to 0.6 – 1.7%, purely driven by the difference between the buyback price and today’s closing price on the accepted portion.
Should you tender your Infosys shares?
For many shareholders, the question now is whether they should tender their shares or sit tight. Market experts believe the buyback provides both an opportunity for near-term gains and a sense of stability for long-term investors evaluating the stock amid a soft demand environment for IT services.
Firstly, the company repurchasing shares at Rs 1,800 apiece via the tender route sets up a clear 17% premium from current levels for those participating.
“For long-term investors, the buyback could act as a psychological floor for the stock, with the Rs 1,800 buyback price serving as a key reference point. It also offers shareholders a chance to tender shares at an attractive premium if they wish to book profits,” says Hariprasad K, Research Analyst and Founder of Livelong Wealth.
He adds that despite near-term challenges, Infosys continues to maintain strong fundamentals, supported by a healthy order pipeline, consistent cash flows and its global standing as a trusted technology partner. The buyback reflects management’s view that these strengths will translate into sustained growth as technology spending revives and AI adoption creates new opportunities.
However, experts point out that while the buyback will support metrics such as EPS and return on equity, the meaningful uplift will be more financial than operational. “The impact will be gradual, not dramatic, because the buyback size, though meaningful, cannot fully offset the effects of a slow IT spending environment,” Ajit Mishra, SVP at Religare Broking, said.
Infosys buyback history
This is Infosys’ fifth share buyback. The previous one was in 2022, when the company repurchased shares worth Rs 9,300 crore through the open market. Notably, this is the first tender-route buyback after three consecutive open-market programmes.
Infosys’ buyback comes at a time when the company’s stock has seen significant underperformance, falling nearly 20% on a year-to-date basis. Analysts say the buyback comes at a crucial time when technology stocks face headwinds, and the corporate action may provide much-needed support to investor confidence.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)