Infosys Ltd. announced on Thursday its first buyback in three years. The company will buy back shares worth Rs 18,000 crore, according to an exchange filing.
This will be the fifth share buyback by the IT giant in the last eight years.
The buyback price has been set at Rs 1,800 per share, according to the exchange filing. This is at a premium of 19.28% from the last closing on the BSE. The IT giant will buy 10 crore shares representing 2.41% of the total number of equity shares.
According to NDTV Profit calculations, on average, Infosys spends 30% cash on buyback. It buys back 14–15% of net-worth. First quarter-cash and cash equivalents are at Rs 45,200 crore, while its net worth is at Rs 95,350 crore. The tech giant did its last buyback in October 2022.
Infosys had conducted four buybacks from 2017 to 2023. The current buyback may provide a cushion to macroeconomic volatility. The share buyback is a part of the policy of capital return Infosys announced in the fourth quarter of financial year 2024.
The buyback comes at a time of heightened pressure on IT stocks due to the worsening global macroeconomic situation led by tariff tensions between US and India. Based on analyst views and valuations, the stock has a consensus target price of Rs 1,743, which suggests a potential 13.7% upside.
However, the range of analyst price targets is quite wide, with the highest forecast at Rs 2,085 seeing a 36% upside and the lowest at Rs 1,440, with a 6% downside. The stock’s current valuation, with a 12-month forward price-to-earnings ratio of 21.5 times, is trading at a discount compared to its 5-year average price-to-earnings ratio of 25 times, suggesting it may be undervalued relative to its historical performance.
