Shares of Tata Consultancy Services (TCS) hit a 52-week high on the BSE in the intraday trade after the company announced plans to consider a share buyback, along with its July-September results on October 11. If finalized, the company would be going for its fifth buyback in the last six years, and the buyback could flush a handsome amount of cash to its parent company, Tata Sons, which holds more than 72% of TCS. The stock, however, couldn’t keep up the gains, citing geopolitical tension and pressure from higher crude prices.
According to market estimates, TCS's upcoming buyback could top out its previous buyback of Rs 18000 crore, and the offer could be somewhere around Rs 19000 crore to Rs 21000 crore or beyond. As of June 30, 2023, the company has around Rs 61,000 crore in cash, bank, and investments.
|Previous Share Buybacks|
|Year||Price per share||Size||Buyback % Share||Buyback Prem.|
|2022||Rs. 4500||Rs. 18000||1.08%||16.80%|
|2020||Rs. 3000||Rs. 16000||1.42%||18.90%|
|2018||Rs. 2100||Rs. 16000||1.99%||20.30%|
|2017||Rs. 2850||Rs. 16000||2.85%||18.80%|
TCS conducted a share buyback in 2022, when it repurchased shares at Rs 4,500 apiece in a buyback valued at Rs 18,000 crore. Earlier to the 2022 repurchase, the company made three buybacks in 2017, 2018, and 2022, which were all worth Rs 16,000 crore. All the previous four buybacks were carried out via the tender offer route. Since 2017, TCS has repurchased around Rs. 66,000 of stock through buyback.
Abhishek Mundada of Dhruva Advisors explains that in the case of a buyback, the company is liable to pay 23% tax on the difference between the buyback price and the share subscription amount it received at the time of the issue of shares.
The stock has given year to date return of 11.25% as compared to benchmark index, Nifty of 7.85%. The stock is currently trading lower at Rs. 3,628.
|ANNUAL||FY 2023||FY 2022||FY 2021||FY 2020||FY 2019|
|Total Assets Growth (%)||1.51||8.23||8.16||5.18||8.13|
|Total Liabilities Growth (%)||1.5||18.37||20.75||44.35||20.6|
|Total Equity Growth (%)||1.51||3.14||2.78||-5.73||5.11|
|Current Ratio (x)||2.53||2.56||2.91||3.33||4.17|
|Total Debt to Equity (x)||0||0||0||0||0|