The latest share buyback from Infosys has opened for subscription, giving eligible investors five trading days to participate in the 18,000-crore rupee offer. The window began on November 20 and will continue until November 26. Only shareholders who held the stock in their demat accounts on November 14 qualify for the programme, as that was the record date set for eligibility.
Infosys plans to repurchase 10 crores fully paid up equity shares of face value five rupees each. This represents up to 2.41% of its total equity share capital, with the buyback price fixed at 1,800 rupees per share. A portion of the offer is reserved for small shareholders, covering 15% of the shares to be repurchased or their entitlement, whichever is higher. The company had over 25 lakh small shareholders who held shares valued at not more than 2 lakh rupees. Promoters including Nandan M Nilekani and Sudha Murthy will not take part in the offer and together held just over 13% on the announcement date. The entitlement ratio is 2 shares for every 11 held for the reserved category and 17 for every 706 in the general category.
Market experts shared their views on whether investors should tender shares. Prashanth Tapse, Senior VP Research at a common financial group, said the buyback offers a reasonable premium. He explained, “Infosys buyback would be only attractive if investors fall in a lower income slab. Long term conservative investors need not worry about holding. While short term investors can calculate the tax and participate in the tender.” Analyst Abhinav Tiwari from another financial firm added that the absence of promoter participation should improve the acceptance ratio for public shareholders, especially retail investors.
Taxation remains an important factor for those considering the tender route. Tapse noted that high tax bracket investors may see reduced gains because the entire amount is taxable. He said, “So net proceeds will already be lower than one thousand eight hundred times accepted shares. This buyback would be only attractive if investors fall in a lower income slab.” Tiwari also explained that buybacks are treated as deemed dividend and taxed at the shareholder’s slab rate. He said investors in higher tax brackets may find a market sale more efficient, while lower bracket investors can still benefit. He highlighted that Infosys is funding the buyback from internal cash, showing strong reserves and steady free cash flow, which supports long term investors who choose not to tender.
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