TCS share price jumped over 1 per cent to Rs 3,644 apiece on BSE, so far in the trade on Wednesday, as the company’s share buyback opened today. Tata Consultancy Services will continue accepting shares till 23 March 2022. The company announced the share buyback programme entailing 4 crore shares. The 14-day long buyback offer is priced at Rs 4,500, which is at 25 per cent premium to Tuesday’s closing price. Analysts say that the investors can participate in TCS’ share buyback. “If we presume the acceptance ratio at around 50%, the investors will have the best of both worlds,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com.
Vaishnav explained that if the price does not appreciate much, they will have the part of their holdings practically sold at Rs 4,500 and if the prices do move higher in the medium term, they will have approximately half of their holdings still left to appreciate. “So, in a way, at the buyback price of Rs 4,500, it does make sense to participate in the offer,” he added.
This is TCS’ fourth and the biggest buyback exercise in the past five years. In buybacks, the shares are bought back by the company from the existing shareholders usually at a price higher than the prevailing market and are shown in the financial statements as treasury stock. TCS has fixed April 1, 2022 as the last date for settlement of bids on stock exchanges.
Analysts say that TCS is one of the best stocks to have one’s portfolio from a long term perspective owing to robust financials, stable top management and steadily growing business which has survived COVID & other recessionary pressures on the economy. “Investors should ideally not tender shares in the buyback and can accumulate at current levels for higher targets of Rs 3950-4300 in the coming months,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com.
Tata Sons and Tata Investment Corporation Ltd (TICL) intend to participate in the buyback offer by tendering shares worth about Rs 12,993.2 crore. Tata Sons, which holds about 266.91 crore shares, intends to tender 2.88 crore shares, while TICL (which holds 10,23,685 shares) intends to tender 11,055 shares. At Rs 4,500 apiece, the two entities will rake in about Rs 12,993.2 crore. The previous Rs 16,000 crore-buyback of TCS had opened on December 18, 2020, and closed on January 1, 2021. In 2018, India’s largest IT services firm repurchased shares worth up to Rs 16,000 crore at Rs 2,100 apiece. A similar exercise was conducted in 2017 as well.
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