TCS Unveils Rs 17,000 Crore Share Buyback Program 15% premium

India’s largest software exporter, Tata Consultancy Services (TCS), made a significant announcement on Wednesday.

TCS revealed a Rs 17,000 crore share buyback plan, pricing each share at Rs 4,150. This price marks a 15% premium over Wednesday’s closing share price.

The decision came after a board meeting convened to discuss TCS’s Q2 results. During the meeting, the TCS  board granted approval for a proposal to buy back 4.09 crore shares, with a total value not exceeding Rs 17,000 crore. This amount represents 1.12% of the overall paid-up equity share capital of the company.

This buyback initiative marks the fifth time TCS has chosen to repurchase shares, and all previous instances followed the tender offer route. Mr Samir Seksaria, TCS’s Chief Financial Officer, stated, “In keeping with our shareholder-friendly capital allocation policy, the Board has recommended a share buyback to the tune of Rs 17,000 crore at Rs 4,150 per share.”

In January 2022, TCS executed a share buyback worth Rs 18,000 crore at Rs 4,500 per share. Additionally, in December 2020, they announced a buyback worth Rs 16,000 crore at a share price of Rs 3,000. The company also conducted two other buybacks, each valued at Rs 16,000 crore, in 2017 and 2018.

TCS shares have performed admirably in 2023, with an approximately 11% increase in value. Despite this, they ended the day slightly lower, at Rs 3,614 on the BSE.

TCS also declared an interim dividend of Rs 9 per share.

In terms of financial performance for the quarter, TCS reported a 9% year-on-year growth in consolidated net profit, reaching Rs 11,342 crore, while consolidated revenue saw a nearly 8% YoY growth, reaching Rs 59,692 crore. However, the sequential growth was modest, with revenue rising by a mere 0.5% and profit increasing by 2.4%.

In constant currency terms, revenue growth amounted to 2.8% year-on-year.

As of October 6, promoter companies held 72.3% of TCS, with foreign institutional investors owning the largest portion at 12.5%, and mutual funds and UTI owning a 3.46% stake.