TCS Share Buyback: A Look at the Company's Buyback History in the Last Six Years

Today marks a significant day for TCS shareholders, as the tech giant is set to announce its fifth share buyback in six years. This move has investors buzzing with excitement, as they eagerly await details about TCS's latest buyback plan. In this blog post, we'll delve into the intricacies of TCS's share buyback history and what investors can anticipate from this latest development.

TCS Buyback History: A Recap Tata Consultancy Services (TCS) has a history of rewarding its shareholders through share buybacks. The journey began in 2017 when TCS initiated its first buyback, announcing a substantial Rs 16,000 crore buyback at an 18% premium to prevailing share prices. This was followed by two more buybacks of Rs 16,000 crore each in June 2018 and October 2020, offering premiums of 16% and 10%, respectively. The most recent buyback announcement occurred in January 2022, with TCS deciding to buy back shares worth Rs 18,000 crore at a 17% premium.

What is a Buyback and Its Significance? A share buyback, also known as share repurchase, is a tax-effective method used by companies to reward their shareholders. When a company announces a buyback, it signals its confidence in its financial stability, strong balance sheet, and its ability to navigate business challenges and market uncertainties. It's considered a favorable indicator for investors as it typically results in an increase in the share price.

The Road Ahead for TCS Share Price It's essential to note that while share buybacks generally lead to share price increases, the extent and speed of this increase can vary. In TCS's case, the stock price took a varying number of sessions to surpass the buyback prices in previous instances. In 2017, it took 228 sessions, while in 2018 and 2020, it took 67 and 60 sessions, respectively. Notably, TCS's share price is yet to exceed the 2022 buyback price of Rs 4,500. Therefore, it's important to understand that a buyback announcement doesn't guarantee immediate or substantial share price gains.

Estimated Worth of TCS 2023 Buyback As of June 30, 2023, TCS reported cash and cash equivalents of Rs 7,123 crore on its balance sheet. Considering TCS's strong track record of generating over Rs 10,000 crore in cash from its operations during a quarter, analysts and market observers estimate that the 2023 buyback could be around Rs 18,000 crore. This figure is indicative of TCS's financial prowess and its commitment to rewarding its shareholders.

What to Expect Today Today, the Board of Directors of TCS is expected to announce the buyback details along with the declaration of a second interim dividend to equity shareholders. As of early trading, TCS shares were seen trading 0.28% higher at Rs 3,639.45 per share at 9:56 am IST. The excitement among shareholders is palpable as they eagerly await the specifics of this much-anticipated buyback.

In conclusion, TCS's commitment to rewarding its investors through regular share buybacks is a testament to its financial strength and unwavering support for its shareholders. As we await the official announcement, it's essential to keep in mind that share prices can respond variably to buyback news, and patience is key for long-term investors.