TCS to buy back shares worth ₹16,000 cr; biggest in India
PARTING GIFT Shareholders approve proposal during Chandrasekaran’s last board meeting as TCS CEO; pressure now on Infosys to follow suit
India’s top software services exporter Tata Consultancy Services (TCS) will buy back shares worth up to ₹16,000 crore, it said on Monday, potentially increasing pressure on rival Infosys to follow suit.
The TCS board has approved the buyback of up to 56.1 million shares at ₹2,850 apiece, biggest in the Indian capital market, the company said in a stock exchange filing, returning cash to shareholders at a substantial premium to Friday’s closing share price of ₹2,407.90.
The share buyback, if successful, will be India’s biggest, surpassing Reliance Industries Ltd’s 2012 share repurchase of ₹10,400 crore.
The board meeting was the last for N Chandrasekaran as TCS CEO before he takes over as chairman of parent Tata Sons Ltd, which controls 73.3%of the software developer, on Tuesday.
TCS shares rose 6.1% on the BSE on Monday, before closing with a gain of 3.9% at ₹2,502.20.
The announcement by TCS comes at a time when some former senior executives at Infosys, India’s second-biggest software services exporter, have demanded a share buyback amid friction between its founders and the board. TCS had total cash and investments of ₹43,169 crore as on December 31, 2016. Infosys had cash of ₹35,697 crore.
On February 8, Cognizant’s board approved to return $3.4 billion to shareholders through share buybacks and dividend.
Share buybacks improve earnings per share and return surplus cash to shareholders.