Infosys buyback offer: An arbitrage worth considering

A year ago, Infosys share was trading at Rs 1,075; two years ago, it was trading at Rs 1,175

Should investors take the Infosys buyback offer? Here’s how to think about it in terms of arbitrage.

A year ago, the share was trading at Rs 1,075; two years ago, it was trading at Rs 1,175. Say, an investor holds X shares bought over a year ago. Those shares are now offered.

If the entire holding is accepted for buyback, there are tax-free profits. The investor can either park those elsewhere or buy more Infosys shares at prevailing prices, post-buyback. In the latter case, he or she may gain something and retain a long-term holding, if the post-buyback price is lower. Given