Infosys share buyback: 3 key questions & how stock fared in last 4 issues 

IIFL Securities in its latest note addressed some key investor questions surrounding the forthcoming Infosys Ltd share buyback. The IT giant would be seeking shareholder approval for the Rs 18,000 crore buyback via a special resolution. The remote e-voting will commence from Monday, October 6, 2025 and would end on Tuesday, November 4, 2025. On this date, the resolution would be deemed to have been passed, if approved by the requisite majority. The first buyback in three years, the Infosys issue was announced on September 8.

IIFL said the buyback offers an implied yield of 3 per cent and premium of 26 per cent to Infosys share price on the date of announcement of buyback. It noted that Infosys has outperformed Nifty IT in two out of the previous four buybacks in a 3-month period, indicating no direct correlation of buyback and stock performance. The brokerage has a target price of Rs 1,820 on the stock, hinting at 26 per cent upside. 

Why the timing were unusual
IIFL said the buyback could not be timed to coincide with quarterly results or board meetings, as it depended on approvals from the US Securities and Exchange Commission (SEC) due to Infosys’ American Depositary Shares (ADS) listing. SEC exemptions take several weeks, and once granted, the announcement must be made immediately. 

"Hence, the buyback announcement, a month ahead of Infosys’ second-quarter results, may seem unusual but was necessary," IIFL said.

"The switch to a tender offer was also regulatory. Infosys’ previous preferred mechanism of open market buybacks is no longer permitted, leaving the tender offer as the only route for the company to return cash to shareholders," IIFL said.

Impact on Infosys dividends
Infosys’ capital allocation policy targets returning around 85 per cent of cumulative free cash flow over FY25-29. In FY25, free cash flow reached $3.7 billion (113 per cent of PAT), with dividends totaling Rs 43 per share (59 per cent of FCF), leaving $5.3 billion in cash on the balance sheet as of 1QFY26, IIFL said. The company, the broking firm noted, plans to continue growing dividends annually, and the buyback is intended to return the excess cash, not replace future dividend payouts. The front-loaded FCF generation in FY25/26 prompted an early-cycle buyback, IIFL said.

Buyback EPS neutral

At the tender offer price of Rs 1,800, which implies 23 times FY27 earnings, the buyback is largely EPS neutral and tax-neutral for most shareholders compared to dividends. While a buyback does not affect total shareholder returns, it can enhance EPS growth versus dividends and support valuations. IIFL Securities said the share buyback is a structured, policy-aligned move to efficiently return excess cash while maintaining dividend growth and overall shareholder value.