TCS Set To Announce Its Fifth Share Buyback In Six Years Today

TCS has bought back its shares in 2017, 2018, 2020, and 2022. The company, valued at over Rs 13 lakh crore, has bought back shares worth Rs 66,000 crore in the past six years

TCS in an exchange filing informed that the board of directors will consider a proposal for buyback on Wednesday’s meeting.

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Indian IT major Tata Consultancy Services (TCS) is set to announce its fifth share buyback in six years on Wednesday. The IT firm in an exchange filing informed that the board of directors will consider a proposal for buyback on Wednesday’s meeting. This share buyback in six years will reward investors with an increasing cash in its reserves.

TCS has bought back its shares in 2017, 2018, 2020, and 2022. The company, valued at over Rs 13 lakh crore, has bought back shares worth Rs 66,000 crore in the past six years.

According to news reports, JP Morgan said it expects a buyback size of Rs 18,000 crore, while Morgan Stanley pegs it between Rs 18,000 and 22,500 crore. IIFL sees it being between Rs 18,000 and 20,000 crore.

TCS bought back its shares for the first time in 2017. The firm announced a buyback worth Rs 16,000 crore in February 2017 at an 18 per cent premium to prevailing prices. This was followed by two more buybacks of Rs 16,000 crore each in June 2018 and October 2020, at an 18 and 10 percent premium, respectively. The last buyback was announced in January 2022. The company decided to buy shares worth Rs 18,000 crore at a premium of 17 percent.

In a share buyback, a company buys back shares from its shareholders, usually at a premium to prevailing prices, giving shareholders the option to fully or partly exit a stock at a profit. A buyback signals the management’s confidence in its business.

A buyback also indicates how a company sees its fair value (the buyback price). More often than not, the stock price eventually moves in that direction. However, such movements have been slower than expected in case of TCS.

TCS on Wednesday clocked a 16.83 per cent jump in its June quarter consolidated net profit to Rs 11,074 crore. The Tata Group firm had posted a net profit of Rs 9,478 crore in the year-ago period and Rs 11,392 crore in the preceding quarter.

Shares of TCS were trading at Rs 3,640.15 apiece on the BSE, up 0.31 per cent.