Tata Consultancy Services (TCS), the biggest information technology (IT) business in India, will begin its Rs 18,000 crore share purchase today (March 9) and continue for two weeks till March 23.
The business launched a scheme to repurchase up to 4,00,00,000 fully paid-up equity shares with a face value of Re l each for Rs 4,500 each last month (12 February).
The IT powerhouse has designated April 1, 2022, as the final date for settlement of bids on stock markets, but this may occur sooner, TCS said in a filing with the stock exchange earlier this week.
The tcs share price of Rs 4,500 is 25% higher than its latest settlement price on March 8 on the BSE of Rs 3,599.95.
This will be the IT services giant’s fourth share repurchase program. In the previous three cases, TCS’s promoter, Tata Sons, was the primary benefactor.
The organization has created two categories:
a.) small investors
b) generic classification
According to information provided on the exchanges, the repurchase ratio for small shareholders is 1 equity share for every 7 equity shares held on the record date (February 23), while the ratio for the general category is 1 equity share for every 108 equities shares held on the record date.
What is a repurchase of shares?
A share repurchase or buyback is a company’s decision to acquire its own shares from the market. Such a step serves to increase the price of the company’s shares by reducing the number of outstanding shares. It is often conducted when management believes the company’s shares are undervalued.
It is also a crucial method for transferring excess profits to shareholders and usually results in a rise in share values.
Who is eligible to take part in this buyback?
The record date for identifying the stockholders eligible for the repurchase was established for February 23 by TCS. This signifies that all shareholders who had TCS shares as of February 23, 2022, will be able to sell them back to the firm at the specified ratio.
In addition, the proprietors of TCS – Tata Sons and Tata Investment Corporation (TICL) – aim to participate in the repurchase offer by submitting about Rs 12,993.2 crore worth of shares, according to a previously filed corporate document.
Tata Sons, which has about 266.91 billion shares, proposes to offer 2.88 billion shares, while TICL, which holds approximately 10.23 million shares, intends to present 11,055 shares, according to the filing.
At Rs 4,500 each, the two firms will earn around Rs 12,993.2 billion.
What happened during the last TCS share repurchase?
The previous Rs 16,000 crore repurchase of TCS was available from December 18, 2020 to January 1, 2021. In this offer, Tata Sons has offered shares worth Rs 9,997,500 crore. Over 5.33 crore equity shares were purchased at that time (offer price was Rs 3,000 per share), and 3,33,25,118 Tata Sons shares were accepted as part of the repurchase offer.
In 2018, the biggest IT services provider in India repurchased shares worth up to Rs 16 billion at Rs 2,100 a share. In 2017, a similar experiment was done.
What Is For Individual Investors?
On the record date, 15% of the repurchase amount would be reserved for retail investors who held shares worth less than Rs 2 lakh as of the record date. Record date is the last day to take advantage of the promotion. This implies that if you possess less than 51 TCS shares, you will get the reservation benefit at a 15% acceptance rate. Reserves of Rs 2,700 crore will be made for these stockholders (6 million shares at a price of Rs 4,500 per share).
Earlier Buybacks
This buyback offer comes more than a year after the company’s last one (December 18, 2020 to January 1, 2021), which was valued at around Rs 16,000 crore and Tata Sons offered shares valued at Rs 9,997.5 crore. Over 53,3 million equity shares were acquired at that time (offer price was Rs 3,000 per share), while 3,33,25,118 Tata Sons shares were acquired under the buyback plan.
In 2017 and 2018, TCS was responsible for two buybacks totaling Rs 16,000 crore. In 2018, TCS repurchased 76.1 million shares at Rs 2,100 per share, a premium of 14% above the market price at the time.
In the three most recent buybacks, the acceptance rate was one hundred percent. This indicates that those who want to cash in their shares at the repurchase price were approved. Nonetheless, the notional retail entitlement ratio is between 25 and 30 percent, according to a Sharekhan analysis.
Conclusion:
TCS reported its profits for the quarter ending in December 2021 in January 2022. The company’s net income increased by 12.2% to Rs 9,769 crore. Its income climbed by 16.3 percent during the year under review, from Rs 42,015 crore to Rs 48,885 crore. Additionally, the corporation has announced a dividend of Rs 7 per share.
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