Tata Consultancy Services (TCS) on Wednesday said it will consider its third share buyback proposal to reward the shareholders, at its board meeting on October 7. TCS shares jumped 7.30 per cent to Rs 2,706.85 following the announcement and its market capitalisation (m-cap) crossed the Rs 10 lakh-crore mark.
Tata Sons, the holding company of the Tata Group, holds 72 per cent stake in TCS. The Shapoorji Pallonji Group, headed by former Tata Sons chairman Cyrus Mistry, owns 18.3 per cent in Tata Sons. Tata Sons, which participated in the previous two buyback programmes, received over Rs 10,000 crore each in 2017 and 2018.
In 2018, TCS announced a Rs 16,000 crore buyback plan at Rs 2,100 per equity share which was about 14 per cent premium from the previous closing price. In 2017, TCS successfully carried a share buyback programme of Rs 16,000 crore which was then touted as the largest share buyback in Indian capital market history.
Meanwhile, Wipro, which hit a 20-year high, closed 6.73 per cent higher at Rs 334.05.
Buyback plan helps shares rise
Riding on the announcement of the third share buyback programme, shares of TCS jumped 7.30 per cent on the BSE Sensex on Monday, which led to its market capitalisation go past the Rs 10-lakh crore mark.
Analysts said other IT firms are likely to announce similar buyback plans. “It is a positive development for the sector given that it could be a precursor for other IT companies to follow suit. Most IT companies have large surplus cash on books which can be used to reward shareholders either in the form of dividends or buybacks,” said Jyoti Roy, DVP—equity strategist, Angel Broking. Apart from the share buyback plan, the board of India’s largest IT company by market capitalisation will meet on October 7 to consider results for the quarter ended September and second interim dividend, according to an exchange filing.
Meanwhile, TCS said it would be providing Rs 1,218 crore as exceptional item in the Epic Systems Corporation case in the financial results for the three and six months ended September 2020 to be announced on October 7, 2020.
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