TCS buyback: IT major trades ex-date; stock down 1%

Shares of Tata Consultancy Services (TCS), a part of Tata Group, remained in focus as it turned ex-date for share buyback today, November 24. The record date for share buyback is November 25, with the company looking to repurchase shares worth ₹17,000 crore, representing 1.12% of the total paid-up equity share capital. 

Extending losses for the second straight session, TCS shares opened lower at ₹3,499 against the previous closing price of ₹3,508.95 on the BSE. During the session so far, the IT heavyweight declined as much as 1.2% to hit a low of ₹3,468, with more than 1 lakh shares changing hands over the counter.

At the time of reporting, the shares of the country’s most valued IT firm were trading 1.07% lower at ₹3,471.55 level, with a market capitalisation of 12.7 lakh crore.

TCS, the second largest company in terms of market capitalisation after Reliance Industries, has fixed November 25, 2023, as the record date for the purpose of determining the entitlement and the names of the equity shareholders who shall be eligible to participate in the buyback. TCS plans buyback of up to 4,09,63,855 fully paid-up equity shares of face value of ₹1 each at ₹4,150 per equity share, amounting to ₹17,000 crore.

“This reduction in outstanding shares post-buyback is anticipated to yield enhancements in key performance metrics such as return ratios and earnings per share for the company. In the short term, Indian IT stocks may exhibit heightened volatility, influenced by market sentiments and global economic conditions,” says Siddhesh Mehta, Research Analyst, SAMCO Securities.

“Shareholders who aspire to capitalise on the current market dynamics might find it prudent to participate in the buyback offer by tendering their shares,” he adds.

As per the latest shareholding pattern available on the exchange, 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 5.16% 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. 

TCS has a good dividend track report of returning cash to shareholders in the forms of dividend since its listing, through interim dividends during quarters, and final dividends at the year-end. For the year ending March 2023, TCS has declared an equity dividend of 11,500% amounting to ₹115 per share. At the current share price, the dividend yield stands at 3.31%. It has declared 81 dividends since October 2004.

For the quarter ending September 30, 2023, the IT bellwether reported 8.7% year-on-year (YoY) rise in consolidated net profit at ₹11,342 crore as against ₹10,431 crore in the same period last year. The revenue from operations of the IT major stood at ₹59,692 crore in the September quarter this year, up 10% (YoY) as against ₹55,309 crore in the same period last year.

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