Tech Giants' Buybacks Signal Peak, Not Value

Infosys shares recently plummeted 7% to a five-year low, underscoring a lack of market confidence in a near-term recovery for Indian IT firms. This sharp decline serves as a stark reminder to investors and company managements alike.

Just seven months prior to this report's publication date of April 26, 2026, Infosys announced a ₹18,000-crore buyback at a price 56% higher than current levels. This decision now appears poorly judged, especially considering the tax implications at the time.

Across the sector, buybacks by giants like TCS, Infosys, and Wipro, totaling approximately ₹1.24 lakh crore since COVID-19, now largely trade below their repurchase prices. These initiatives were pitched as signals of undervaluation and shareholder-friendly capital allocation, but the outcome suggests they marked peak-cycle optimism instead.

For example, TCS conducted buybacks at prices significantly above its current trading value, resulting in substantial drawdowns for shareholders who did not tender their shares. Similarly, Infosys's buybacks occurred at elevated P/E multiples, and its stock now trades considerably below those repurchase prices, yielding negative returns for many investors.

Wipro's buybacks also present a mixed picture, with a recent repurchase already underwater and a future one priced well above the current market. The overall pattern suggests these buybacks were executed at valuations that were extrapolating growth rather than discounting future risks.

The substantial capital allocated to these buybacks could have been invested in crucial AI capabilities or returned to shareholders as dividends, offering a more tangible benefit. Investors are cautioned that buybacks, especially at high valuations, are not reliable indicators of undervaluation.