Tata Consultancy Services (TCS) on Friday said its board would meet on October 11 to discuss a share buyback proposal.
“This is to inform you that the board of directors will consider a proposal for buyback of equity shares of the company at its meeting to be held on October 11,” the country’s largest IT services firm said in a regulatory filing after market hours on Friday.
Ahead of the announcement, the TCS share ended at Rs 3,620.20 on the BSE, a gain of 0.87 per cent over its last close.
TCS has already announced that its board would meet on the same day to consider financial results for the quarter ended September 30.
The share repurchase proposal comes at a time IT companies are continuing to face challenging conditions though there has been an increase in deal signings. With muted discretionary spending, they are expected to post modest numbers for the quarter. However, their guidance on when a turnaround would happen is being keenly watched.
In a buyback, a company acquires its own shares from the market or from shareholders, which are subsequently extinguished. It improves earnings per share and supports the share in poor market conditions and helps return surplus cash to shareholders.
A share buyback is also seen as a tax efficient way to return money to shareholders. Such programmes witness good response from shareholders when market conditions are weak.
This will be the fifth share buyback by TCS.
TCS had come out with a Rs 18,000 crore offer in March 2022. The programme had entailed the purchase of four crore shares at Rs 4,500 per share. The repurchase drew a strong response from shareholders as they tendered more than 30 crore shares which were 7.5 times more than the offer size.
TCS had then said that parent Tata Sons, which held about 266.91 crore shares, intended to tender 2.88 crore shares while Tata Investment Corporation, which held 10.2 lakh shares, would offer 11,055 shares in the buyback. Its earlier buyback programmes were in 2020 (Rs 16,000 crore) and similar amounts each in 2017 and 2018.
Market circles said that they will not be surprised if the buyback size this time around is also between Rs 16,000 crore and Rs 18,000 crore.
