Infosys share buyback: Board to weigh tender offer on Sept 11 as stock jumps 4%

Buyback call on Sept 11: why it matters now

Infosys signaled another return of cash to shareholders, telling exchanges that its board will consider a buyback of equity shares on September 11, 2025. The timing grabbed attention: the stock jumped nearly 4% on the day, even as the broader IT pack remains under pressure this year. If approved, this would be the company’s fifth large buyback in the last eight years, a pattern that has quietly become part of Infosys’ capital return playbook.

Street chatter is building around two numbers—size and premium. Brokerage estimates, including from Morgan Stanley, peg a potential outlay of about Rs 10,000–14,000 crore, with pricing typically set at an 18–25% premium to the prevailing market price. That range would be meaningful in a stock that’s fallen 28% from its peak and is down roughly a quarter year-to-date. A well-priced offer can help stabilize sentiment and act as a near-term floor.

The context matters. Global tech budgets have been tight, decision cycles are slow, and worries over US tariffs and geopolitics have kept investors cautious. Foreign portfolio investors have cut exposure to Indian IT, with assets under custody in the sector sliding more than 27% between end-2024 and July 2025. Against that backdrop, a fresh buyback reads as a vote of confidence in cash generation and medium-term demand recovery.

Infosys has done this before. In December 2022, it ran a buyback via the open market, repurchasing over 50 million shares for Rs 9,300 crore at a cap of Rs 1,850. Prior rounds include June 2021 (52 million-plus shares), 2019 (over 103 million shares), and 2017 (more than 113 million shares). This time, though, the route changes by regulation, and that’s a big shift for investors to understand.

From April 1, 2025, companies can no longer use the open-market method. That forces Infosys, if it goes ahead, to run a tender offer—where the company announces a fixed price and a fixed quantity, and shareholders can choose to participate by tendering their shares. For many retail investors, acceptance ratio and pricing become the two most important variables.

Beyond the pop in the share price, what the market really wants to see on September 11 is clarity: the size of the pool, the tender price relative to market, management’s tone on demand, and whether this is part of a steady capital return policy. With a healthy cash position and steady free cash flows, Infosys has wiggle room to return capital and still invest in newer growth areas like cloud, AI, and automation.

This is not just about signaling. Buybacks shrink the share count, which can lift per-share metrics like earnings, even if operating growth is modest. They also offer a direct route to unlock value in choppy markets. For an IT index that’s been the year’s worst-performing major sector, stability carries a premium of its own.

There’s also the optics. When a large-cap returns cash during a rough patch, it reads as management backing its valuations. It says: we’re confident enough in future cash flows to buy our own stock now. That message tends to resonate with long-only funds and retail holders who’ve watched the sector lag.

If you’re looking for tells before the meeting, track how peers behave. India’s top IT firms—TCS, Wipro, HCLTech—have leaned on buybacks over the years to return surplus cash alongside dividends. The market usually rewards clarity and consistency in that strategy. Infosys, by running four buybacks in eight years, has shown it prefers both.

How a tender buyback works and what investors should track

A tender offer differs from an open-market buyback in a few important ways. The company declares a price and a maximum number of shares it plans to buy. Shareholders can tender some or all of their holdings during the offer window. If more shares are tendered than the company plans to buy, shares are accepted proportionately—this is the acceptance ratio you hear about.

For small shareholders, there’s a specific benefit. SEBI rules reserve a portion—typically 15%—of the buyback for “small shareholders,” defined by the market value of holdings as of the record date (often up to Rs 2 lakh). This bucket can lead to higher acceptance ratios for retail investors compared to large institutions, depending on participation.

What about taxes? India levies a buyback tax at the company level on distributed income from buybacks, and shareholders generally do not pay capital gains tax on the buyback proceeds received. The details depend on prevailing law and the final structure, but the practical takeaway is that the tax burden typically sits with the company, not the individual tendering shareholder.

Key steps after a board approval are fairly standard. First comes the public announcement and a record date to define eligibility. Next is the letter of offer, where the company lays out the price, size, timelines, and instructions. After regulatory processes, the tender window opens (often around a week), you tender shares via your broker, and settlement follows shortly after with cash credited and any unaccepted shares returned to your demat account.

Investors will be watching five specifics if Infosys green-lights the move:

• Offer size: Whether the board goes closer to Rs 10,000 crore or the top end around Rs 14,000 crore will shape acceptance ratios.
• Premium: A price 18–25% above the market is typical; a stronger premium can drive higher participation.
• Promoter and institutional participation: If promoters and big funds tender heavily, the acceptance ratio for others can fall; if they hold back, retail acceptance can rise.
• Record date and timelines: This affects who qualifies as a small shareholder and how much time the market has to position.
• Capital return policy: Is this a one-off, or should investors expect a steady cadence of buybacks and dividends across cycles?

There’s a broader earnings story tied into this. Over the past year, clients—especially in banking, financial services and insurance (BFSI)—have delayed discretionary projects and trimmed vendor spends. Large deal wins are healthy across the industry, but conversion to revenue has lagged. Add in global uncertainty and tariff noise, and you get muted guidance and sharp multiple compression.

Buybacks cannot change demand cycles, but they can smooth the ride. By shrinking float and offering a premium exit to willing sellers, they recalibrate supply-demand in the stock. They also force a sharper conversation about capital efficiency: are companies carrying too much cash for too long? Should more of it be returned when organic and inorganic investments are not soaking it up fast enough?

Infosys’ history gives a few clues. Its December 2022 open-market buyback capped at Rs 1,850 came amid similar macro jitters. Before that, the 2021 and 2019 programs were part of a deliberate effort to return surplus cash while keeping investment firepower intact. That balance—funding growth bets in AI, cloud modernization, and cybersecurity while rewarding patient shareholders—will likely be the board’s north star again.

Pricing is where expectations tend to drift. Traders will try to second-guess the tender price by looking at past premiums and where peers priced theirs. Long-term holders, meanwhile, focus on acceptance. A smaller offer relative to free float can push acceptance ratios down; a larger one can lift them. Neither group, though, controls the key wild card: promoter and institutional participation.

One nuance often missed in tender offers: not all retail holders get the same acceptance outcome. If the small-shareholder bucket is undersubscribed, the leftover spills over to the general category, potentially boosting acceptance across the board. If it’s oversubscribed, proration tightens. That’s why the record date, the retail bucket definition, and communication from large holders matter.

On the day of the board meet, watch for more than just buyback math. Investors will parse commentary on the demand pipeline, pricing pressure, offshore mix, and the pace of generative AI projects moving from pilots to production. The company’s view on whether client budgets are stabilizing into H2 FY26 will likely be as important to the stock as the headline buyback number.

Currency is another lever. A weaker rupee tends to lift margins for exporters like Infosys, but hedging and pricing resets can blunt the impact. Management color on margin levers—utilization, pyramid, subcontracting costs, and onshore-offshore mix—can give clues on how much operating cushion sits behind the buyback narrative.

For context, the Nifty IT index has fallen over 19% this year, making it the worst-performing major sector. That stat boxes in sentiment. In drawdowns like this, capital return often carries more signaling power than in bull markets. It tells investors the business throws off cash even when growth is patchy.

So, what should a regular shareholder do now? Keep it simple: track the board decision, the tender price, and the record date. Don’t anchor to historical acceptance ratios—they change with structure and participation. If you fall under the small-shareholder definition, understand the reservation mechanics. And remember that tendering is optional; you can hold through if your horizon is long.

One last thing on expectations. A buyback is not a silver bullet. It can set a floor, improve per-share math, and calm nerves. But the stock will eventually take its cues from revenue growth, deal momentum, and margin delivery. The buyback just buys time for the operating engine to catch up.

If Infosys goes ahead, it would extend a consistent record of shareholder returns. The market response—a swift 4% bounce—shows investors are hungry for that message in a tough tape. The only question now is how big, at what price, and how fast the company moves from approval to execution.

For those scanning headlines, here’s the short version: the board meets on September 11, a tender offer is the only allowed route under new rules, and analysts expect a Rs 10,000–14,000 crore program with an 18–25% premium. Put differently, the Infosys share buyback could be the catalyst the stock needs to steady itself while the sector waits for demand to improve.