TCS share buyback: Tata Consultancy OKs Rs 18,000-crore share buyback at over 16% premium

Tata Consultancy Services (TCS) has announced a buyback valued at Rs 18,000 crore at Rs 4,500 per share.

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TCS share buyback price is at a premium of 16.7 per cent over the today's closing price of the stock. Image: Reuters

Tata Consultancy Services (TCS) has announced a buyback valued at Rs 18,000 crore at Rs 4,500 per share. The buyback price is at a premium of 16.7 per cent over the today’s closing price of the stock. In today’s trade, Tata Consultancy Services (TCS) share price ended 1.5 per cent down at Rs 3,857.25 apiece. The board of directors of the company has approved to repurchase up to 4 crore shares. “The Board of Directors of the company at its meeting held today has approved a proposal to buyback up to 4 crore equity shares of the company for an aggregate amount not exceeding Rs 18,000 crore, being 1.08% of the total paid-up equity share capital, at Rs 4,500 per equity share,” TCS said in a BSE filing. The IT bellwether has posted a net profit of Rs 9,769 crore in the fiscal third quarter, as compared to Rs 9,624 crore in the previous quarter.

The previous buyback of the TCS, worth Rs 16,000 crore, had opened on December 18, 2020, and closed on January 1, 2021, in which group holding firm Tata Sons rendered shares worth around Rs 10,000 crore. A total of 3.3 crore Tata Sons’ shares were accepted under the offer. Over 5.33 crore equity shares were bought back under the offer for Rs 3,000 apiece. 

During 2017 and 2018, TCS had initiated two equity share buybacks, both of which were for an aggregate amount of Rs 16,000 crore. In 2018 the shares were bought back by TCS at a price of Rs 2,100 per share, a 14% premium to the stock price back then. TCS bought 7.61 crore equity shares back then. In 2017 the Rs 16,000-crore share buyback, saw TCS buy shares at a price of Rs 2,850 per share, again at a premium to the market value back then. 

TCS share price performance

During Wednesday’s intraday trade, it hit a high of Rs 3,930.15 and a low of Rs 3,836.80 apiece. In traded volume terms, a total of 1.23 lakh shares exchanged hands on BSE, while 32.03 lakh shares traded on NSE on Wednesday. TCS shares fell 1.11 per cent in the October-December quarter. In comparison, the Nifty 50 index also declined 1.01 per cent during the quarter under review.

In the last one month TCS share price has gained nearly 7 per cent, and 21 per cent in the last six months. It surged over 22 per cent in the last one year.

Infosys, Wipro’s share buybacks in 2021

Infosys and Wipro have also undertaken share buyback programs to return surplus cash on their books to shareholders. In September 2021, Infosys had said it bought back over 5.58 crore equity shares as part of its about Rs 9,200-crore buyback offer. The process saw shares being bought back in the range of Rs 1,538.10 and Rs 1,750. Wipro had also completed a Rs 9,500-crore buyback in January last year. As per capital market regulator Sebi regulations, the maximum limit for a buyback should be 25 per cent or less of the aggregate of paid-up capital and free reserves of the company.

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