TCS announces ₹17,000 cr buyback; shares dip 1% post Q2

IT bellwether Tata Consultancy Services (TCS) unveiled its fifth share buyback in the span of six years on Wednesday after its board approved a buyback worth ₹17,000 crore, which is 1.12% of the total paid-up equity share capital, at ₹4,150 per share.

As part of the buyback process, TCS will acquire a total of 4,09,63,855 shares at a 13% premium over the Wednesday market closing price of ₹3,613 apiece.

"The Board of Directors of the Company at its meeting held today has approved a proposal to buyback up to 4,09,63,855 Equity Shares of the Company for an aggregate amount not exceeding ₹17,000 crore, representing (1.12)% of the total paid-up equity share capital, at ₹4,150 per Equity Share," TCS informed via a stock exchange filing on Wednesday.

The buyback is proposed to be made from the existing shareholders on a proportionate basis under the tender offer route. The company says the buyback size does not include transaction costs, applicable taxes and other incidental and related expenses.

"In keeping with our shareholder friendly capital allocation policy, the Board has recommended a share buyback to the tune of ₹17,000 crore at ₹4,150 per share,” says Samir Seksaria, chief financial office, TCS.

The pre-buyback shareholding pattern of the company as of October 6, 2023, shows the promoters own a 72.30% stake in the company, while a 12.5% stake is held by foreign portfolio investors. A total of 5.91% stake is owned by insurance companies, while 3.46% is owned by mutual funds and UTI. Only 5.21% of shares of the company are owned by the public.

Before this, TCS had rolled out share buybacks in the years 2022, 2020, 2018 and 2017. The IT major bought back shares worth ₹66,000 crore in these buybacks.

Meanwhile, shares of Tata Consultancy Services Ltd (TCS) dipped 1.08% today despite reporting 8.7% rise in net profit on year-on-year in the quarter ended September 30, 2023.

The stock opened 0.6% down at ₹3,585 and plunged to intra-day low of ₹3,560.05 so far. The TCS shares are trading 3% down as compared to the 52-week high of 3,680 touched on October 9, 2023. At the current share price, the company's m-cap stands at ₹13,06,354.52 crore.

TCS reported 8.7% rise in its consolidated net profit on year-on-year (YoY) basis at ₹11,342 crore during the July-September period. The revenue stood at ₹59,692 crore in the September quarter this year, up 10% (YoY).

The company says the growth was led by UK (up 10.7% YoY), while segment-wise the business grew the most in energy, resources and utilities (over 14.8%) and manufacturing (over 5.8%). The margin expansion at the company drew EPS (earning per share) growth of 5.7% YoY during the said quarter. Its orderbook stood at $11.2 billion, with book to bill ratio of 1.6.