TCS shares buyback kicks in today; closing date, last date of settlement of bids on exchanges, expected return—All you need to know

IT behemoth TCS (Tata Consultancy Services) buyback offer is all set to kick in for 4 crore equity shares from Wednesday, March 9, 2022. As per the notification, TCS buyback window will close on March 23. IT major will buy back fully paid-up equity shares of face value of Rs 1 at price of Rs 4,500 per equity share payable in cash for an aggregate consideration not exceeding Rs 18,000 crore, excluding transaction costs, applicable taxes, other incidental and related expenses from the Equity Shareholders of the Company as on the record date.  

On buy back price of Rs 4500, a retail shareholder was allowed to buy up to 44 shares (Rs 2,00,000) to be eligible under retail category.

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Buyback Entitlement: The number of Equity Shares that an Eligible Shareholder is entitled to tender in the Buyback Offer based on the number of Equity Shares held by such Eligible Shareholder on the Record

Date and the ratio of Buyback applicable to the category to which such Eligible Shareholder belongs.

Buyback Offer Size: Maximum number of Equity Shares proposed to be bought back (i.e. 4,00,00,000 Equity Shares) multiplied by the Buyback Offer Price (i.e. `4,500 per Equity Share), not exceeding ₹18,000 crore.  

The last date of settlement of bids of TCS shares on the stock exchanges is April 1, 2022.

Below is the full timeline of TCS buyback offer

Earlier, Brokerage house Motilal Oswal had said that a retail investor can get a potential return of 5-9% (pre-tax) with the acceptance ratio to be in the range of 30-50%. The acceptance ratio might get lower, as retail participation might have increased over the last 10 months and is likely to increase further post the Buyback announcement.  

"Retail investors looking for a short-term opportunity can buy shares of TCS from the open market and tender them in the buy-back offer. One could get could get a potential return of 5-9% in 1-2 months, provided one is able to sell the remaining un-tendered shares at current price ~Rs3818)," the brokerage had said last month.

Ahead of launch of share buyback offer, the stock of the IT giant closed with a gain of Rs 114.65 (+3.29%) to Rs 3599.95 per share on the BSE on Tuesday.  

What is buyback?  

It is a corporate action in which a company buys back its shares from the existing shareholders, usually at a price higher than the market price. When the company buys back its shares, 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.  

Earlier, last year, IT majors Wipro and Infosys had announced buyback offers of Rs 9500 crore and 9200 crores in January 2021 and September 2021.  

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