Infosys' biggest-ever share buyback, worth Rs 18,000 crore, opened for subscription on Thursday (November 20), giving eligible investors five trading days to decide whether they want to participate. The buyback window will remain open until November 26. Only shareholders who held Infosys shares as of November 14, the record date, are eligible to tender their holdings in this offer.

What the Buyback Offers

Infosys plans to repurchase 10 crore fully paid-up equity shares, representing 2.41% of its total equity capital. The buyback price has been fixed at Rs 1,800 per share, a premium over recent market levels.

Key highlights:

• Buyback size: Rs 18,000 crore
• Buyback price: Rs 1,800 per share
• Shares to be repurchased: 10 crore
• Small shareholder quota: 15% reservation
• Promoters' participation: None, founders including Nandan Nilekani and Sudha Murty are not tendering their shares

For retail investors (share value ≤ Rs 2 lakh), the buyback ratio is 2:11, meaning two shares can be tendered for every eleven held.

For general shareholders, the ratio is 17:706.

The acceptance ratio indicates how many of the tendered shares will actually be bought back by the company.

Should Investors Tender Their Shares?

Analysts say the buyback presents a good opportunity, especially for investors in lower tax brackets.

"Attractive for Retail Investors"

Prashanth Tapse of Mehta Equities believes the buyback price offers a reasonable premium.

"The Infosys buyback is attractive if investors fall in a lower income slab. Long-term conservative investors need not worry about holding, but short-term investors can consider the tender offer after factoring in taxes," he said.

Higher Acceptance Likely This Time

Abhinav Tiwari of Bonanza notes that because promoters are not participating, retail acceptance ratio could be more favourable.

"With promoters stepping aside, public shareholders-especially retail-may see higher acceptance, improving realised gains," he added.

The Tax Catch

Taxes could be the biggest spoiler for many. Since share buybacks are now counted as 'deemed dividends', the entire payout is taxed at the investor's slab rate.

This means high-income investors may find the buyback less rewarding.

Tapse explains:

"For those in higher tax slabs, net gains shrink sharply. The buyback makes more sense for lower-income shareholders."

Tiwari added that for investors with 30%+ tax liability, selling shares in the open market near the buyback price could be more efficient.

A Sign of Strength From Infosys

Despite taxation concerns, analysts highlight the company's solid financial footing. Infosys is funding the buyback entirely from internal cash reserves.

According to Tiwari:

"Reducing share count boosts ROE and partially offsets slower EPS growth. Long-term holders who do not tender still benefit from the buyback."

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