After Infosys, TCS, Wipro may follow with buyback amid stock rout: Analysts

Infosys will repurchase 100 million shares at an average price of ₹1,800 per share, a 19.3 per cent premium to its closing share price of ₹1,509.50 on Thursday

Infosys has made the announcement to repurchase shares worth ₹18,000 crore — a decision that is likely to nudge its largecap peers to follow suit with buyback offers amid a plunge in their share value.

 

Infosys will repurchase 100 million shares at an average price of ₹1,800 apiece, a 19.3 per cent premium to its closing share price of ₹1,509.50 on Thursday. This represents 2.41 per cent of the total number of equity shares in the company’s paid-up equity capital, the company said in a release late on Thursday.

 

After the repurchase announcement by Infosys, more companies could come up with buyback offers, said Abhishek Pathak, vice president, institutional research analyst, Motilal Oswal Financial Services. "But it's important to see this for what it is, largely a way to return cash to shareholders, rather than a signal about the business cycle," Pathak added.

 

Large information technology (IT) firms do buybacks every 18-24 months, and so it's a fairly routine process, Pathak added. "In fact, Infosys has clearly stated that it aims to return about 85 per cent of its free cash flows over a five-year period through a mix of semi-annual dividends, buybacks, and/or special dividends," he added.  ALSO READ: Rupee sinks to record low on strong dollar demand and tariff concerns

 

The Bengaluru-based firm utilised ₹13,000 crore for its buyback back in 2017, via tender offer, repurchasing 113 million shares at an average price of ₹1,150 per share. In 2019, Infosys spent ₹8,260 crore to purchase 110.5 million shares for ₹747 per share in the open market. Similarly, in 2021 and 2022, the tech giant bought shares worth ₹9,200 crore (55.8 million shares) and ₹9,300 crore (60.4 million shares), respectively.

 

Infosys buyback is "very positive" and is expected to bring confidence from an investor perspective in the run-up to the second-quarter results, according to a Mumbai-based senior market analyst. Given the current volatility in the IT space, and the absence of strong triggers for the stock to outperform, such an event helps protect the downside, the analyst noted.

 

"Overall, the buyback is seen as very positive for Infosys, and more announcements from peers are also expected. Among them, Tata Consultancy Services (TCS) is one company to watch out for," he said. 

 

However, this should not be read as a sign of stability for the sector as a whole, he cautioned, adding: "The sector remains volatile, and stock performance will depend on upcoming earnings in October."

 

Those at CLSA, too, are aligned to this thought. Infosys' share buyback proposal, they said in a recent note, can trigger buyback talks at India's largest IT services company TCS as a confidence-building measure amid an overall weak demand environment.

 

TCS’ last five share buybacks show that they have provided technical support to the stock price from the initial announcement date until buyback closure, CLSA said. "TCS' last share buyback concluded in December 2023, and instead of paying a huge special dividend during the third quarter of 2025-26 (FY26), we believe it may do a ₹20 crore tender buyback," said the institutional brokerage and investment group.

 

Analysts at Morgan Stanley said earlier that the timing of the buyback is "interesting" and they see it as a "signal of stability", according to a Bloomberg report. The last buyback announcement and completion have been well over 12 months now for TCS and Wipro, which makes them potential candidates to announce share buybacks, Morgan Stanley said.  ALSO READ: Rupee sinks to record low on strong dollar demand and tariff concerns

 

The buyback comes at a time when Infosys shares have declined 19 per cent so far this year. The broader IT index has fallen over 17 per cent, making it the worst-performing major sector, compared to a 6 per cent rise in the Nifty50 index. TCS is down nearly 24 per cent while Wipro stock has fallen by 16 per cent in 2025 so far amid modest earnings and US trade tariffs. 

US SEC grants exemptive relief for Infosys buyback

 

The US Securities and Exchange Commission (SEC) has granted exemptive relief for Infosys’ share buyback as requested by the company, according to a statutory filing on Friday. The exemptive relief is on certain aspects of the tender offer procedures, due to conflicting regulatory requirements between Indian and US laws for tender offer buybacks. (PTI)