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Friday, June 15, 2018

Tata Consultancy Services(TCS)approves Rs 16,000 crore share buyback offer at 17% premium

Shares of India’s biggest IT firm Tata Consultancy Services Ltd (TCS) on Friday surged over 3% after the company said that its board approved buyback of shares worth Rs 16,000 crore at over 17% premium from previous close. TCS market cap hit Rs 7.05 trillion, or $103.75 billion, with its share price achieving a record high of Rs 1849 on BSE, up 3.17% from previous close.

On Friday, TCS share price rose 2.94% to Rs1,845 on BSE while the benchmark index Sensex closed 0.06% higher at 35, 622.14 points.

In its board meeting, TCS said that the company will buy back up to 76.19 million shares aggregating up to 1.99% of the paid-up equity capital via tender route at a price of Rs 2,100 per equity share.

The buyback price is at a steep 17.17% premium to Thursday’s closing price of Rs 1,792.25.

Recently, TCS gave one for one bonus scrip to its shareholders. The IT bellwether expects the share buyback to be completed in the second quarter of 2018-19.

“The share buyback announcement is in line with TCS’ stated intent to return 80-100% of free cash generated to shareholders through the dividend/ buyback route. Nevertheless, we maintain our cautious stance on TCS due to expensive valuations with the stock trading at 21X FY2020E earnings,” said Kotak Institutional equities in a 14 June report.

Last year, TCS, Infosys Ltd and Wipro Ltd returned $9.75 billion to its shareholders to keep investors’ faith amid slowing growth in the sector. TCS repurchased Rs 16,000 crore worth of shares, while Infosys and Wipro made repurchases worth Rs 10,000 crore and Rs 11,000 crore, respectively

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