Infosys surges 5%, tops Rs 1,500 ahead of buyback proposal; analysts weigh in

Shares of IT major Infosys Ltd surged 4.90 per cent in Tuesday's trade, hitting a day high of Rs 1,502.90. The upmove followed the company's announcement that it would consider a share buyback proposal on September 11.

The Bengaluru-headquartered firm has a stated policy of returning around 85 per cent of its free cash flow cumulatively over a five-year period through dividends, share buybacks and special dividends, subject to approvals. Infosys last conducted a buyback between December 2022 and February 2023 at Rs 1,539.06 per share, amounting to Rs 9,299.98 crore.

Market expert Kush Ghodasara maintained a cautious stance on Infosys despite the buyback development. "Not just Infy, all major IT stocks underperformed the market in the last two to three years. The ratio of buyback would be most important. Don't play for corporate actions but definitely if you are an investor and you are getting some profits on Infosys, I recommend to give back shares in the buyback. I believe the IT sector would remain in sideways to downside momentum for the next six to eight months," he told Business Today.

Arpit Beriwal, Manager – Derivatives Analyst (Equity Research) at Motilal Oswal Financial Services, noted that Infosys is trading in a narrow band.

"Overall IT index has been a huge underperformer. Infosys is trading in a range between Rs 1,440 and Rs 1,520 levels. Any closing above Rs 1,500 levels will definitely change the setup of the stock. Till then, our stance is that the upside is capped. So we'll be closely watching Rs 1,500 levels. Between that, it is likely to consolidate between Rs 1,440 to 1,520 levels," he added.