IT Services Giants Tata Consultancy Services (TCS) today said that the members of the company have approved buyback of shares up to 18,000 crore by passing a special resolution through postal ballot.
“The members of the company have approved the buyback by passing a special resolution through postal ballot,” the company said in a stock exchange filing.
The company has fixed Wednesday, February 23, 2022, as the record date for the purpose of determining the eligibility and the names of equity shareholders who will be eligible to participate in the buyback.
On January 12, 2022, the Board of Directors of TCS had announced the buyback of 4,00,00,000 fully paid-up equity shares of face value of Rs. 4,500 per equity share for the total amount 18,000 crores.
TCS shares closed on 3,693, down 77.35 or 2.05 per cent on the NSE on Friday.
Tata Sons looking to participate in TICL buyback
Tata Consultancy Services (TCS) said last month that its promoters Tata Sons and Tata Investment Corporation Ltd (TICL) also intend to participate in the offer. Tata Sons holds around 266.91 crore shares in the company and intends to tender 2.88 crore shares for the buyback, while TICL, which holds 10,23,685 shares, offered to tender 11,055 shares.
previous buyback offer
TCS’s previous buyback offer approx 16,000 crores opened on December 18, 2020 and closed on January 1, 2021, in which Tata Sons, the holding firm of the group, tendered shares worth Rs. 9,997.5 crores.
At that time more than 5.33 crore equity shares were purchased (the offer price was 3,000 each) and out of the total 3,33,25,118 shares of Tata Sons were accepted under buyback offer.
Share buybacks and what it means for investors:
Share buybacks, or share repurchases, occur when a company buys back its shares from investors or stakeholders. It can be seen as an alternative, tax-efficient way to return money to shareholders.
The buyback is attractive from a tax point of view even after considering the 10 per cent tax on Long Term Capital Gains (LTCG).
Usually, companies go for share buyback if it wants to increase the demand in the market. Share buybacks reduce the number of shares in circulation, which can increase the share price and earnings per share (EPS).
When a company buys back shares, it results in a reduction in the number of outstanding shares and the capital base. To that extent, it improves the company’s EPS and ROE. When EPS goes up, assuming the P/E remains constant, the stock price should rise as well.
Generally, Indian IT companies like Infosys, TCS, Wipro and HCL Tech have a lot of cash and its price too. Therefore, it is better to return cash to shareholders through buybacks.
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,