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TCS share buyback opens today: Here’s everything you need to know

TCS share buyback: Tata Consultancy Services (TCS) had announced the share buyback program last month (February 12) entailing up to 4,00,00,000 fully paid-up equity shares of the face value of Re l each at Rs 4,500 apiece.

A private security guard stands at the exit gate of the headquarters of Tata Consultancy Services (TCS) in Mumbai, India October 13, 2016. (REUTERS/File Photo)

India’s largest information technology (IT) company Tata Consultancy Services (TCS) is beginning its Rs 18,000 crore share buyback from today (March 9) and will continue for two weeks till March 23.

The company had last month (February 12) announced the share buyback program entailing up to 4,00,00,000 fully paid-up equity shares of the face value of Re l each at Rs 4,500 apiece.

The IT behemoth has fixed April 1, 2022, as the last date for settlement of bids on stock exchanges which it said may even happen earlier, TCS informed in an exchange filing earlier this week.

The share buyback price of Rs 4,500 is 25 per cent higher than its last settlement price of Rs 3,599.95 on March 8 on the BSE.

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This will be the fourth share buyback program for the IT services giant. In the earlier three instances, Tata Sons, TCS’s promoter, was the biggest beneficiary.

The company has established two categories: a.) small shareholders and b.) general category.

For small shareholders, the ratio of the buyback is 1 equity share for every 7 equity shares held on the record date (February 23) and for the general category, the ratio is 1 equity share for every 108 equity shares held on the record date, as per the information shared in the exchanges.

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What is a share buyback?

A share repurchase or buyback is a decision by a company to purchase its own stock from the market. Such a move reduces the number of outstanding shares of the company and tends to push up their price and is often undertaken when management considers the company’s shares undervalued.

It is also a key way to transfer surplus earnings to shareholders and tends to lead to an increase in share prices.

Who can participate in this buyback?

TCS had set February 23 as the record date for determining the shareholders eligible for the buyback. This means that all those shareholders who owned TCS shares as of February 23, 2022, can sell them back to the company in the predetermined ratio.

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This apart, the promoters of TCS – Tata Sons and Tata Investment Corporation (TICL) – also intend to participate in the buyback offer by tendering shares worth about Rs 12,993.2 crore, as per a company document filed earlier.

Tata Sons, which holds about 266.91 crore shares, intends to tender 2.88 crore shares, while TICL (which holds 10,23,685 shares) intends to tender 11,055 shares, it added.

At Rs 4,500 apiece, the two entities will rake in about Rs 12,993.2 crore.

What happened in the previous TCS share buyback?

The previous Rs 16,000 crore-buyback of TCS had opened on December 18, 2020, and closed on January 1, 2021. Tata Sons had tendered shares worth Rs 9,997.5 crore in that offer. Over 5.33 crore equity shares were bought at that time (offer price was Rs 3,000 apiece) and out of the total, Tata Sons’ 3,33,25,118 shares were accepted under the buyback offer.

In 2018, India’s largest IT services firm repurchased shares worth up to Rs 16,000 crore at Rs 2,100 apiece. A similar exercise was conducted in 2017 as well.

-with PTI inputs

First published on: 09-03-2022 at 02:08:49 pm
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