Infosys has been in the news for all the wrong reasons in the last couple of years. First, there was the major concern over the company ceding leadership position in the industry to TCS. That gap (at least in market cap terms) has widened in the last couple of years. Secondly, Infosys like most IT firms has operated in an extremely difficult global environment when the traditional BFSI model was going out of fashion and IT spending was moving digital. Lastly, the differences between the founding promoters and the CEO were out in the open which finally culminated in the resignation of the CEO. In the midst of all these challenges, Infosys also got approval for its Rs.13,000 crore buyback program.

The buyback program becomes all the more relevant at this point of time for two reasons. Retail investors are increasingly asking whether they should opt for the buy-back offer considering the uncertainty surrounding the company at the current juncture. Secondly, the buyback price at the time of announcement itself was at an 18% premium to the market price. With the recent correction post the resignation of Vishal Sikka, this buyback premium has widened to about 30%. Let us understand the logic for the buyback.