Tata Sons, the holding company of salt-to-software Tata Group, will sell $1.25 billion worth of Tata Consultancy Services (TCS) shares in block deals, television news reports said citing unidentified sources. Tata Sons will sell TCS shares at Rs 2,872–2,925 per share, at a discount of 4.2%-5.9% from Monday’s closing price of Rs 3,052.15 per share.
Last June, Tata Sons sold its shares worth Rs 10,278 crore in TCS in a mega Rs 16,000 crore buyback programme — the largest in India to date. The 13-day buyback comprised 2.85% of the company’s paid-up capital.
TCS is among most-profitable businesses of the Tata Group. The IT giant, in the past few months, not only topped Rs 6 trillion market valuation several times but also surpassed Mukesh Ambani’s Reliance Industries briefly.
The TCS buyback last year got a lukewarm response from small shareholders, but large investors such as Government of Singapore, Copthall Mauritius Investments Ltd and EuroPacific Growth Fund participated positively, while Tata Sons itself too sold shares, as mentioned above.
According to PTI, the Government of Singapore got over Rs 335 crore, Copthall Mauritius Investments, about Rs 187 crore, and EuroPacific Growth Fund received over Rs 161 crore from the buyback programme last year. Last year, Indian IT companies were under pressure to release returns excess cash either through dividend or buybacks. Besides TCS, its rival companies Wipro and Infosys also announced buybacks last year.
TCS shares underperformed the benchmark markets last year, rising by 14% through the year 2017, while the 30-share BSE Sensex surged at double the pace, rising 28% through the year. Credit Suisse maintained a neutral rating on TCS, which reported a flat growth in earnings in the third quarter of the fiscal year 2017-18. TCS’s net profit came in at Rs 6,531 crore against Rs 6,778 crore in the comparable quarter last fiscal.