TCS Buyback: Last Day to Participate, Should You Opt for it?

Shares of Tata Consultancy Services will turn ex-date on February 22 for the Rs 18,000-crore buyback. So, today is the last day to buy Tata Consultancy Services (TCS) shares for investors who want to participate in the share buyback proposal announced by the company. TCS has set February 23, 2022 as the record date to identify investors who will be eligible to participate in the stock buyback plan. That means investors can buy TCS shares today to participate in buyback plan as the shares will reflect in their accounts on February 23 as per the T+2 settlement rule of stock exchanges.

On January 12, 2022, the board of directors of TCS had announced the buyback of up to 4,00,00,000 fully paid-up equity shares of the face value of Re 1 each at Rs 4,500 per equity share for an aggregate amount of Rs. 18,000 crore.

How do Existing Investors Take Part in this Buyback?

Importantly for the tendering of shares in a buyback, there is a form available which you can fill and submit with the broker and on your behalf, the broker will submit it to the company. There is another route for the same that from the company’s website, you can download the buyback letter. You can fill and submit the same with your broker. Also, you can transfer the buyback shares from your demat account to the company’s demat account.

Experts Take on TCS Buyback

There are strong recommendations for tendering shares in the buyback even if you do not have money, experts advise to sell some existing shares and buy into the scrip for substantial gains in the short term much higher than the FD rate, which can be up to 20 per cent at the current price.

Santosh Meena, head of research, Swastika Investmart Ltd., said that the TCS buyback is a good opportunity for retail investors which is around 18 per cent higher compared to Friday’s closing price.

“Historically, the acceptance ratio remained around 70 per cent and the stock price manages to cross buyback price. If we look at the fundamentals then the outlook is bullish despite slightly expensive valuations and we have already seen some correction in the stock price from the 52-week high. Retail investors should participate in TCS buyback where we are expecting an acceptance ratio between 50-70 per cent and investors can hold the remaining shares for the long term,” Meena added.

Previous TCS Buyback

The previous buyback of the TCS, worth about Rs 16,000 crore, had opened on December 18, 2020, and closed on January 1, 2021, in which group holding firm Tata Sons had tendered shares worth Rs 9,997.5 crore. Over 5.33 crore equity shares were bought at that time (offer price was Rs 3,000 apiece) and out of the total, Tata Sons’ 3,33,25,118 shares were accepted under the buyback offer.

During 2017 and 2018, TCS had initiated two equity share buybacks, both of which were for an aggregate amount of Rs 16,000 crore. In 2018 the shares were bought back by TCS at a price of Rs 2,100 per share, a 14 per cent premium to the stock price back then. TCS bought 7.61 crore equity shares back then. In 2017 the Rs 16,000-crore share buyback, saw TCS buy shares at a price of Rs 2,850 per share, again at a premium to the market value back then.

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