TCS announces its biggest share buyback in at least five years

Mumbai: The board of has recommended a Rs 18,000-crore share buyback—the fourth and biggest such exercise by India’s largest IT services firm in the past five years.

Shares in the TCS buyback will be priced at Rs 4,500 apiece.

Between Dec. 18, 2020, and Jan. 1, 2021, the IT bellwether returned Rs 16,000 crore to shareholders in a buyback, wherein Tata Sons tendered shares worth around Rs 10,000 crore. As many as 5.33 crore equity shares—including Tata Sons’ 33,325,118—were bought back at Rs 3,000 apiece. TCS had undertaken similar repurchases in 2018 and 2017.

During a buyback, a company repurchases its shares from existing shareholders, usually at a price higher than the prevailing market rate. As a result, the number of shares outstanding in the market reduces.

Peers Infosys Ltd. and Wipro Ltd. have over the past few years effected similar buybacks.

In 2019-20, Infosys enhanced its capital allocation plan and said it would return 85% of its free cash flow to shareholders via buybacks and dividends over the next five years.

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In August 2019, Infosys bought back 11.05 crore shares as part of a Rs-8,260 crore buyback offer. In September 2017, the company spent Rs 13,000 crore to purchase 11.3 crore equity shares. In September 2021, it undertook a Rs 9,200-crore buyback of 5.58 crore shares. The shares were bought back at a volume-weighted average price of Rs 1,648.53 apiece.

In January 2021, Wipro bought back 23.75 crore shares worth Rs 9,500 crore. HCL Technologies had last undertaken a buyback worth Rs 4,000 crore in 2018.

On Wednesday, TCS shares fell 1.50% to Rs 3,857.25 apiece on BSE while the benchmark Sensex ended the day 0.88% higher at 61,150.04 points. The company declared its December quarter results and the buyback plan after market close.

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