TCS announces Rs. 17,000 crore share buyback at 15% premium
Tata Consultancy Services (TCS) has announced a share buyback plan worth Rs. 17,000 crore, at a price of Rs. 4,150 per stock. That's a premium of roughly 15% compared to the current market price. As of today (October 11), the TCS stock closed at Rs. 3,613, down by 0.44%. The company aims to buy up to 4,09,63,855 shares, equal to 1.12% of its total equity. Keep in mind, the buyback size doesn't include transaction costs, taxes, or other related expenses.
Fifth share buyback in six years
This is the fifth stock buyback by TCS in six years. So far, it has repurchased shares worth Rs. 66,000 crore in four previous rounds. The first buyback happened in 2017, with the company buying stocks worth Rs. 16,000 crore at an 18% premium. The next two took place in 2018 and 2020, both valued at Rs. 16,000 crore and offering premiums of 18% and 10%. The most recent occurred in 2022 for Rs. 18,000 crore at a 17% premium.
Lower buyback price compared to previous exercise
Interestingly, the current buyback price of Rs. 4,150 per share is lower compared to the previous buyback value of Rs. 4,500. TCS mentioned in an exchange filing that the buyback is subject to shareholder approval through a special resolution via postal ballot. More details about the process, timelines, as well as other necessary information will be shared in line with buyback regulations.
Implications for TCS and shareholders
The share buyback is expected to create value for shareholders and boost investor confidence in TCS. As the company continues to grow and expand its operations, the buyback serves as a way to return excess cash to shareholders while keeping a healthy balance sheet. Plus, it shows TCS's commitment to delivering long-term value for its investors.
