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Infosys Limited, India’s second-largest IT services company, has received exemptive relief from the United States Securities and Exchange Commission (SEC) to proceed with its ₹18,000 crore share buyback plan. This regulatory green light allows Infosys to include US-based shareholders, particularly those holding American Depositary Shares (ADS), in its tender offer—bridging the gap between Indian and US securities laws. The move underscores Infosys’ commitment to equitable shareholder participation and strategic capital allocation.
Buyback Structure and Scope
1. The Infosys Board approved the buyback proposal on September 11, 2025, targeting up to 2.41 percent of the company’s paid-up equity share capital.
2. The buyback will be executed via the tender offer route, with shares purchased at ₹1,800 apiece.
3. A total of 10 crore fully paid-up equity shares will be repurchased, subject to shareholder approval through a special resolution.
4. The buyback size does not exceed 25 percent of the company’s paid-up capital and free reserves, in line with SEBI’s Buyback of Securities Regulations.
5. The record date for shareholder eligibility will be announced soon, and the offer will be open to all equity holders, including those converting ADS into equity shares.
Why SEC Relief Matters
1. US-based investors holding Infosys ADSs often face regulatory hurdles when participating in Indian buybacks.
2. The exemptive relief from the SEC allows these shareholders to cancel their ADSs and tender the underlying equity shares in the buyback.
3. This ensures parity between domestic and international investors, enhancing Infosys’ global governance reputation.
4. The relief also simplifies compliance and avoids potential legal conflicts between Indian and US securities frameworks.
Strategic Rationale Behind the Buyback
1. Infosys aims to enhance shareholder value by reducing outstanding equity, thereby improving Earnings Per Share (EPS) and Return on Equity (ROE).
2. The buyback is also a response to recent stock underperformance—Infosys shares have declined 24 percent year-to-date in 2025.
3. By deploying surplus cash, Infosys avoids long-term capital expenditure commitments while signaling confidence in its financial health.
4. The move helps offset dilution from employee stock options and restricted stock units, a key concern given Infosys’ large equity-linked compensation structure.
Market Sentiment and Analyst Takeaways
1. Analysts view the buyback as a positive signal, reinforcing Infosys’ strong cash flow management and long-term growth visibility.
2. The company’s free cash flow for Q1 FY2026 stood at $884 million, providing ample liquidity for non-disruptive capital deployment.
3. Compared to dividends, buybacks offer more tax-efficient returns for long-term investors, especially in India’s current tax regime.
4. Infosys has historically used the open market route for buybacks, but the tender offer ensures broader retail participation this time.
Key Highlights
- Infosys receives exemptive relief from US SEC for its ₹18,000 crore buyback
- Buyback will be conducted via tender offer at ₹1,800 per share, targeting 2.41 percent of equity capital
- US-based ADS holders can participate by converting to equity shares
- Strategic goals include EPS improvement, offsetting ESOP dilution, and signaling undervaluation
- Shareholder approval and record date announcement pending
- Analysts view the move as a confidence booster amid global IT spending pressures
Looking Ahead
Infosys’ buyback plan, backed by regulatory clarity and strategic intent, positions the company to navigate market volatility while rewarding shareholders. The SEC’s exemptive relief not only facilitates cross-border participation but also sets a precedent for other Indian firms with global investor bases. As Infosys continues to invest in AI, cloud, and digital transformation, this capital move reinforces its commitment to sustainable value creation.
Sources: MSN Money, Infosys Investor Relations PDF, Kotak Securities, Times of India
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