Tata Consultancy Services (TCS) on Monday became the second Indian firm after Reliance Industries to attain a market valuation of more than ₹10 lakh crore helped by a rally in its share price.
In the morning trade, the stock jumped over 6% ahead of its board meeting later this week to consider a share buyback proposal.
The stock rose by 6.18% to reach its record high of ₹2,678.80 on the BSE. It zoomed 6.16% to ₹2,679 — its all-time high on the NSE.
Following the rally in its share price, the company’s market valuation jumped to ₹10,03,012.43 crore in afternoon trade on the BSE.
TCS last month became the second Indian firm to have a market valuation of over ₹9 lakh crore after Reliance Industries Limited.
It is the second most-valuable domestic firm in terms of market capitalisation.
Meanwhile, Reliance Industries Limited is the first Indian firm to have crossed the ₹10 lakh crore market valuation mark. Its market valuation is currently at ₹15,02,355.71 crore - the highest for any listed company in the country.
TCS in a regulatory filing on Sunday night said that “... the board of directors will consider a proposal for buyback of equity shares of the company, at its meeting to be held on October 7, 2020“. No other details of the buyback plan were disclosed.
The TCS board is also slated to consider its financial results for the September quarter and declaration of a second interim dividend to the equity shareholders at that meeting.
In 2018, the Mumbai-based company had undertaken a share buyback programme worth up to ₹16,000 crore.
The buyback, at ₹2,100 per equity share, had entailed up to 7.61 crore shares. In 2017 too, TCS had undertaken a similar share purchase programme.
TCS had announced the mega buyback offer as part of its long-term capital allocation policy of returning excess cash to shareholders.
“TCS has announced that the board of directors will consider a proposal for buyback of equity shares ... We believe that while this is a positive development for the company it is also a positive development for the sector given that it could be a precursor for other IT companies to follow suit.
“Most IT companies have large surplus cash on books which can be used to reward shareholders either in the form of dividends or buybacks,” said Jyoti Roy - DVP- Equity Strategist, Angel Broking Ltd.