Buyback plan sends TCS into Rs 10 L cr m-cap club

MUMBAI: Tata Consultancy Services Ltd is likely to spend 200 bln rupees to buy back around 2% of its stake or 75 mln shares, analysts said.

The development saw the share price surging over 7%, lifting its market capitalisation over Rs 10 lakh crore.

This implies that the company could offer to buy back shares at around 2,700 rupees apiece.

This is the third buyback by the information technology major. It had carried out buybacks in 2017 and 2018, each worth 160 bln rupees.

The current buyback is set to be the largest by the company so far. TCS will consider the share buyback on Wednesday, along with its earnings for the September quarter.

The company has not specified the number of shares or the price at which it will buy the shares.

The Tata group company has a policy of returning most of the free cash it generates to shareholders, either by way of dividend or share buybacks.

It had cash and investments of 511.12 bln rupees as of June. So far in 2020-21 (Apr-Mar), the company has declared total dividend of 11 rupees.

Tata Consultancy Services on Monday became the second Indian firm after Reliance Industries to attain a market valuation of more than Rs 10 lakh crore helped by a rally in its share price.

The stock rose by 7.30 per cent to close at Rs 2,706.85 on the BSE. During the day, it jumped 8 per cent to its record high of Rs 2,727.

It zoomed 7.55 per cent to settle at Rs 2,713.95 on the NSE.

Following the rally in its share price, the company's market valuation jumped Rs 69,082.25 crore to reach Rs 10,15,714.25 crore at close of trade on the BSE.

These gains less than two weeks after it came under severe selling pressure amid market buzz that promoters Tata Sons could sell stake in the company.