TCS falls 3% as shares turn ex-record for Rs 18,000 crore buyback

NEW DELHI: Shares of Tata Consultancy Services (TCS) declined over 3 per cent on turning ex-record date for the buyback. The company plans to buyback Rs 18,000 crore shares from shareholders at Rs 4,500 per share.

The ex-record date is usually a day before a corporate action is scheduled. Buying shares on an ex-record date doesn’t make you eligible for the corporate action, as delivery of shares will not be possible by the time the record date kicks in. TCS has set February 23 as the record date for buyback.

TCS was the second biggest loser in the Nifty pack. It traded at Rs 3,595.15, down 3.34 per cent. The counter hit day’s low of Rs 3,586. The premium of the buyback price now stands at 25 per cent.

Trading at 35 times its earnings, TCS is one of the most expensive stocks in the largecap IT segment, even as it has underperformed in delivering earnings growth compared to its largest competitor Infosys in recent times.

However, riding on a strong deal pipeline and a global rush for digitisation, the demand for the stock is still there. Analysts, overall, have a ‘buy’ rating on the counter but more and more of them are now becoming neutral, reasoning the stock is now priced to perfection.

The median price target of 43 analysts that track the stock is Rs 4,154, translating in 16 per cent upside from current levels. The highest estimate pegs the stock at Rs 5,000 in 12 months and the lowest at Rs 2,935.