TCS Board clears Rs 16000 cr share buyback; biggest in India

"TCS Board of Directors has approved a proposal to buyback up to 5.61 crore equity shares of the company for an aggregate amount not exceeding Rs 16,000 crore", the company said in the filing. At that price, TCS can buy back up to 5.6 crore, or 2.85%, of its outstanding shares.

In a filing, TCS said the buyback - the biggest ever in India - would be "made from shareholders of the company on a proportionate basis under the tender offer route using the stock exchange mechanism", The Hindu reported.

The board meeting is the last that newly-elected group chairman N Chandrasekaran is presiding over before he takes over as chairman of parent Tata Sons Ltd, tomorrow.

The buy-back decision follows close on the heels of competitor Cognizant Technology Solutions Corp.'s decision to opt for a $3.4 billion plan that includes buy-backs and dividends.

The buyback of the shares, is a good indication of the under valuation of the stock in the markets and also is good given that the cash yields are running low and earning yield in IT industry has improved on back of the underperformance of the stock. N Ganapathy Subramaniam (NGS as he is called) is now the President of TCS Financial Solutions, a strategic business unit of TCS.

Infosys will now feel the heat to initiate a similar buyback after TCS.

Infosys had liquid assets, including cash and cash equivalents and investments, worth Rs 35,697 crore (about $5.25 billion) on its books at the end of December 2016. "A consistent payout policy can be used to value the stock better on cash flows", Narayan said. "These two comments have come from investors and we will discuss it in the board", he had said, adding that over the years, TCS has been increasing its dividend payments to shareholders.

Balakrishnan, along with former colleague TV Mohandas Pai, had sought a Dollars 1.8 billion buyback in 2014 as well, just as its CEO Vishal Sikka was taking over.

Ramakrishnan will take over from Rajesh Gopinathan who has been elevated to the position of chief executive officer and managing director of TCS from February 21.

  • Zachary Reyes