Infosys, a leading Indian IT services company, recently announced a massive Rs 18,000 crore share buyback program. A key detail caught the attention of investors: the company's promoters, including co-founders like N.R. Narayana Murthy and Nandan Nilekani, will not participate in this offer. This decision creates a significant advantage for retail investors, potentially increasing their opportunities to tender shares and benefit from the buyback. ### Promoters Show Confidence, Step Aside Infosys' board approved the Rs 18,000 crore share buyback on September 11, 2025. The company plans to repurchase up to 10 crore fully paid-up equity shares, representing about 2.41% of its total share capital^[1][2]. The buyback price is set at Rs 1,800 per share, which was a notable premium of around 19% over the market price on the day the announcement was made^[1][3]. The Infosys promoters and promoter group, which includes founding families such as N.R. Narayana Murthy, Nandan Nilekani, Sudha Murty, and others, officially stated their intention not to participate in the buyback through various letters in mid-September 2025^[4][5][6][2]. This means they will not offer their shares back to the company. Their current collective stake in Infosys stands at approximately 13.05%^[1][5][6]. If the buyback is fully subscribed by other shareholders, the promoter group's ownership stake could slightly increase to 13.37% because the total number of outstanding shares will decrease^[1][4]. This non-participation sends a strong message to the market. By choosing to hold onto their shares, the founders and promoter group signal their deep confidence in Infosys' long-term growth prospects and future value^[4][7][3][8]. This move suggests they believe the company's shares will appreciate further over time, making it more beneficial to retain their holdings rather than selling them in the buyback^[8]. ### Direct Benefits for Small Investors The promoters' decision directly benefits retail investors. Infosys is conducting the buyback through a "tender offer route"^[4][9]. In this method, shareholders can offer their shares to the company at the fixed buyback price. Crucially, 15% of the total buyback amount is reserved specifically for small investors, those holding shares worth up to Rs 2 lakh^[4]. When promoters do not tender their shares, a larger pool of shares becomes available for other shareholders, including retail investors, to offer^[3]. This can lead to a higher "acceptance ratio" for retail investors. The acceptance ratio refers to the proportion of shares tendered by an investor that the company actually buys back. A higher acceptance ratio means individual retail investors have a better chance of selling more of their shares at the premium price of Rs 1,800. Anuj Gupta, Director at Ya Wealth, explained how buybacks work. "Buyback of shares is a way for companies to return excess cash to shareholders and reduce the number of shares outstanding. When fewer shares are out there, EPS typically increases, which can help the stock price in the medium term," he said^[9]. He also noted that in a tender route buyback, if more shares are offered than the company wants to buy, shares get accepted on a pro-rata basis^[9]. Seema Srivastava, Senior Research Analyst at SMC Global Securities, offered a practical perspective. "The acceptance ratio for the buyback is expected to be low due to heavy oversubscription. Current estimates suggest that retail shareholders are likely to see a 6-20% acceptance ratio, meaning only a fraction of shares tendered by retail investors are likely to be accepted," she stated^[9]. Despite the potential for a lower overall acceptance ratio due to high demand, the absence of promoter participation still improves the odds for individual small investors. ### Long-Term Value and Shareholder Rewards Beyond the immediate opportunity to sell shares at a premium, the buyback offers several long-term advantages for retail investors. When a company repurchases its own shares, it reduces the number of outstanding shares in the market. This often leads to an increase in key financial metrics such as Earnings Per Share (EPS) and Return on Equity (ROE)^[7]. Improved financial ratios can make the stock more attractive to investors and support its price over time. This buyback is Infosys' fifth since 2017, demonstrating a consistent strategy to return capital to shareholders^{[4][7][8][10]}. The company's capital allocation policy aims to return approximately 85% of its free cash flow over a five-year period through a mix of dividends and buybacks^[1][2]. This consistent approach helps reinforce investor confidence, even during uncertain market conditions^[7][8]. Furthermore, buybacks can be more tax-efficient for many retail investors compared to receiving dividends^[7]. While shares accepted in the buyback will be subject to capital gains tax, any shares not accepted remain in the investor's demat account, offering potential for long-term appreciation or future sale at market prices^[9]. The company's decision to conduct a substantial buyback, funded entirely from its reserves without borrowings, also highlights management's confidence in its strong cash flows and future growth prospects^[4][7]. This strategic move not only rewards current shareholders but also signals the company's stable financial health and its commitment to enhancing shareholder value. Infosys shares saw a positive reaction to the announcement, climbing around 4-5% on October 23, 2025, after the news of promoter non-participation became widely known^[1][8][10]. This market response underscores the positive sentiment around the buyback, especially given the clear benefit to public shareholders. The buyback effectively allows the company to utilize surplus cash, reduce its equity base, and potentially boost shareholder value over the long term, aligning with its capital allocation goals^[2][8].

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