Country’s largest software exporter Tata Consultancy Services will open its Rs 16,000 crore share buyback offer for investors on December 18.
TCS has decided to buyback upto 5,33,33,333 equity shares and the floor price for this offer has been fixed at Rs 3,000 per share.
The offer, as per the schedule, will close on January 1, 2021. This is the third share buyback offer from the company after August 2018 and May 2017.
The stock gained just 3.7 percent from the date of share buyback announcement till December 17, a day before the issue opening. But it already shot up 73 percent from March 19’s low and gained 31 percent in the current year 2020 so far.
Going by the past trends and historic data, TCS has given record-breaking compounded returns to every investor with an average 35-50 percent acceptance ratio.
Based on SEBI mandate that companies reserved 15 percent of the buyback for small shareholders with holdings of less than Rs 2 lakh as on the record date which means TCS has to buy Rs 2,400 crore from retail shareholders.
The buyback is proposed to be made under the tender offer route, and is open to all eligible shareholders of the company holding equity shares either in physical or electronic form, as on the record date – November 28.
TCS is providing a 5.7 percent returns through buyback offer as on December 17 closing.
The IT company in its offer document said the offer price represented a premium of 29.89 percent and 29.27 percent to the volume-weighted average market price of the equity share on BSE and NSE, respectively, during the three months preceding October 4, 2020, being the date of intimation to the stock exchanges of the date of the board meeting to consider the proposal of the buyback, and a premium of 18.92 percent and 18.88 percent over the closing price of the equity share on BSE and NSE, respectively, as on October 1, 2020, being the last trading date prior to the intimation date.
The current buyback is in line with the company’s shareholder-friendly capital allocation practice of returning excess cash to shareholders, thereby increasing shareholder value in the longer term, and improving the return on equity.
As of October 7 this year, promoter and promoter group held 72.05 percent equity stake in TCS.
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