TCS schedules ₹17,000 Cr Share Buyback with Record Date on 25-Nov-2023

Tata Consultancy Services (TCS), India's leading IT services provider, has marked November 25, 2023, as the record date for its ₹17,000 crore share buyback. This date will determine the eligibility of shareholders looking to participate in this buyback plan.

TCS Buyback Details

TCS plans to repurchase up to 40.96 million fully paid-up equity shares each with a face value of ₹1 at ₹4,150 per share. The total amount allocated for this buyback does not exceed ₹17,000 crore. The announcement was made on October 11 and since then the stock has declined by 6%.

This marks TCS's fifth share buyback in six years reflecting its strategy to reward investors with the growing cash in its reserves. The company previously conducted share buybacks in 2017, 2018, 2020, and 2022, cumulatively amounting to shares worth ₹66,000 crore.

In 2017, TCS initiated its first share buyback, repurchasing shares worth ₹16,000 crore at an 18% premium. Subsequent buybacks in June 2018 and October 2020 were also substantial, offering premiums of 18 and 10% respectively. The most recent buyback occurred in January 2022, where shares worth ₹18,000 crore were bought back at a 17% premium.

TCS Q2 FY24 & Stock Performance

Tata Consultancy Services (TCS) reported a net profit of ₹11,342 crore for Q2 FY24, fueled by a strong order book, especially in the BFSI segment. The consolidated revenue reached Rs 59,692 crore, with Q2 order wins at $11.2 billion. The EBIT margin increased to 24.3% from the previous quarter's 23.2%, and dollar revenue for the IT giant was $7,210 million.

Tata Consultancy Services (TCS) is currently trading at ₹3518, marking a 3.34% increase from the previous close. Over the past month, TCS's share price has exhibited a relatively flat performance. However, a broader view over the last six months reveals a positive trend, with the stock price up by 8%. Extending our analysis to a one-year timeframe, TCS has delivered a modest return of close to 5%. For long-term investors with a five-year horizon, TCS has proven to be a rewarding investment, offering an impressive 86% return. Despite the recent dip, the buyback price represents an upside of 21.7% from the closing price of Wednesday.

Previous Deal

Tata Consultancy Services (TCS) has entered into a multi-year partnership with the prominent British retail giant, Asda. The collaboration aims to support Asda's ambitious digital transformation efforts and implement a new IT operating model, following its separation from Walmart. TCS will play a pivotal role in building a new digital core for Asda this involves the implementation of several cloud-based ERP platforms to streamline various critical processes within the company. These include supply chain forecasting, buying and merchandising, HR operations, warehouse management, and e-commerce activities. Additionally, TCS will use its innovative Machine First Delivery Model to automate Asda's IT operations this initiative will enhance the overall experience for both employees and customers while boosting operational resilience.

In July, TCS entered into a multi-year partnership with the British Broadcasting Corporation (BBC) to revamp its finance and payroll operations for greater efficiency, the primary objective is to modernize BBC's finance processes using cutting-edge digital technologies, aiming to boost efficiency, reduce processing time, and achieve improved outcomes. Under the agreement, TCS will oversee application processes supporting BBC's finance, procurement, and HR functions. Furthermore, TCS will introduce an integrated analytics-driven payroll platform to streamline BBC's payroll operations.