TCS Rs 18,000-cr buyback offer: Size, price, process—Key details investors should know

IT giant Tata Consulting Services (TCS) on Wednesday presented result for the October-December 2021 quarter and also announced a buyback. Besides, the company has also declared a third interim dividend of Rs 7 per Equity Share of ₹1 each of the Company.  

What is Buyback?  

As per the BSE, buyback is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than market price. When it buys back, the number of shares outstanding in the market reduces. A buyback allows companies to invest in themselves. By reducing the number of shares outstanding on the market, buybacks increase the proportion of shares a company owns. 

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How Buy back is executed ? 

It can be executed by two ways. In the first case, shareholders may be presented with a tender offer whereby they have the option to submit (or tender) a portion or all of their shares within a certain time frame and at a premium to the current market price.  

Second, the companies buy back shares on the open market over an extended period of time. 

TCS buyback size and price 

As per the communication from India's largest IT company, the IT major will buyback 4 crore equity shares worth Rs 18,000 crore. The company has fixed a price of Rs 4,500 per share for the buyback offer.  

"We wish to inform you that the Board of Directors of the Company at its meeting held today has approved a proposal to buyback up to 4,00,00,000 (Four crore) Equity Shares of the Company for an aggregate amount not exceeding ₹18,000 crore," the company said in a regulatory filing.  

Buyback mechanism, process & timeline  

The buyback is proposed to be made from the shareholders of the company on a proportionate basis under the tender offer route using the stock exchange mechanism in accordance with the provisions contained in the SEBI (Buy-Back of Securities) Regulations, 2018.  

The Buyback Size does not include transaction costs, applicable taxes and other incidental and related expenses. The Buyback is subject to approval of the Shareholders by means of a special resolution through a postal ballot.  

"The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the Buyback Regulations" the company said.   

Previous buyback offer 

TCS' previous buyback offer of around ₹ 16,000 crore had opened on December 18, 2020, and closed on January 1, 2021. Over 5.33 crore equity shares were bought back under the offer for ₹ 3,000 apiece. 

TCS Q3FY22 Result 

Earlier, TCS on Wednesday reported a 1.5% QoQ rise in the consolidated profit at Rs 9,769 crore for the quarter ended December 31, 2021 against Rs 9,624 crore in the previous quarter. Its revenue from operations grew 4.3% QoQ to Rs 48,885 crore in the reported quarter compared to Rs 46,867 crore posted in the September quarter.