TCS ₹17,000 Crore Buyback: Opening on 1-Dec-2023

Tata Consultancy Services (TCS), India's leading software exporter, has revealed details about its ₹17,000 crore share buyback program. The buyback is set to commence on December 1 and conclude on December 7. TCS plans to repurchase up to 4.09 crore shares at ₹4,150 apiece, constituting 1.12% of the total equity share capital.

Entitlement Ratios for Shareholders

For small shareholders, the entitlement ratio is one equity share for every six equity shares held on the record date (November 25). Other eligible shareholders have an entitlement ratio of two shares for every 209 shares owned.

TCS, in a regulatory filing, expressed confidence that the buyback would not affect its profitability or earnings. The company acknowledged a potential reduction in funds available for investment but emphasized that it wouldn't hinder growth opportunities.

Tata Sons Private Limited plans to tender 2,96,03,690 equity shares, while Tata Investment Corporation Limited intends to tender 11,358 shares. The total buyback size is 4,09,63,855 shares. If all shareholders participate up to their entitlement, promoters' aggregate shareholding will increase slightly from 72.3% to 72.41%.

Record Date and Buyback History

The record date, set on November 25, determines eligible shareholders for the buyback. This marks TCS's fifth share buyback in six years. The previous one, in 2022, involved shares repurchased at ₹4,500 apiece, totaling ₹18,000 crore. The IT major had conducted three earlier buybacks in 2020, 2018, and 2017, each valued at ₹16,000 crore. All four buybacks, including the latest, followed the tender offer route, where the company repurchases shares from existing shareholders at a fixed price.

TCS FY24 Q2 Highlights

Tata Consultancy Services (TCS) announced a strong financial performance for Q2 of the current fiscal year, posting a net profit of ₹11,342 crore. The success was attributed to a resilient order book, particularly in the BFSI segment, amid challenging business conditions. TCS reported consolidated revenue of ₹59,692 crore and secured order wins totaling $11.2 billion, reflecting a quarter-on-quarter increase. The EBIT margin rose to 24.3%, and dollar revenue stood at $7,210 million. TCS's order book at the end of Q2FY24 was $11.2 billion, exceeding the previous quarter's $10.2 billion TCV.

Final Words

As of the latest trading session, TCS shares were 0.72% higher at ₹3,495.05 on the NSE. Year-to-date, the scrip has gained nearly 7%, compared to a 9% rise in the Nifty50 index. In the last month, Tata Consultancy Services (TCS) shares rose by 3.45%, signaling a positive trend. Over the past six months, investors enjoyed a steady growth of 5.27%. Those who invested a year ago saw a return of 2.88%. Zooming out to a five-year perspective, TCS stock has surged impressively by 77%, establishing itself as an appealing choice for long-term investors.