TCS announces Rs18,000-cr share buyback
07 Mar 2022
The board of Tata Consultancy Services (TCS), India’s largest IT services company, has recommended a Rs18,000-crore share buyback, which is also the biggest among the four buyback operations undertaken by in the past five years.
TCS has offered to pay Rs4,500 per share in the latest buyback, giving shareholders an opportunity to make 13- to 18 per cent gain over market price of these shares.
Small shareholders who take part in the TCS’ Rs18,000-crore buyback could earn potential returns of 6 per cent to as much as 13.5-18 per cent, depending on how many of the tendered shares are accepted by the company.
In the previous share buyback during 18 December 2020 to 1 January 2021, TCS returned Rs16,000 crore to shareholders, including Rs10,000 crore for shares tendered by Tata Sons. TCS had undertaken similar repurchases in 2018 and 2017 as well.
The IT major had bought back as many as 53.3 million equity shares, including Tata Sons’ 33,325,118 shares, at Rs3,000 apiece.
On Wednesday, TCS shares fell 1.50 per cent to Rs3,857.25 apiece on BSE while the benchmark Sensex ended the day 0.88 per cent higher at 61,150.04 points. The company declared its December quarter results and the buyback plan after market close.
Peers Infosys Ltd. and Wipro Ltd have over the past few years effected similar buybacks.
In 2019-20, Infosys enhanced its capital allocation plan and said it would return 85% of its free cash flow to shareholders via buybacks and dividends over the next five years.
In August 2019, Infosys bought back 11.05 crore shares as part of a Rs-8,260 crore buyback offer. In September 2017, the company spent Rs 13,000 crore to purchase 11.3 crore equity shares. In September 2021, it undertook a Rs 9,200-crore buyback of 5.58 crore shares. The shares were bought back at a volume-weighted average price of Rs 1,648.53 apiece.
In January 2021, Wipro bought back 23.75 crore shares worth Rs 9,500 crore. HCL Technologies had last undertaken a buyback worth Rs 4,000 crore in 2018.