InvestorQ : What are the highlights of the TCS buyback offer made to shareholders?
Priyanka N made post

What are the highlights of the TCS buyback offer made to shareholders?

Answer
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Neelam Naik answered.
2 weeks ago


Here are some of the key highlights of the TCS buyback offer.

· The buyback was announced by TCS on 07 October along with the announcement of its quarterly results for Sep-20

· The total buyback will entail 5.33 crore shares at Rs.3000 per share. The actual effective date will be communicated by the company subsequently.

· The total size of the buyback will be Rs.16,000 crore. Incidentally, this is exactly the size of the buyback undertaken by TCS in the years 2017 and 2018 too.

· In terms of funding the buyback, TCS has Rs.35,000 crore in its balance sheet in the form of cash and short term investments. So internal resources are hardly a problem.

· In the past, buybacks by TCS have jacked up prices in the short term for TCS but have done little beyond that.

· That is largely because investors interpret buybacks as a signal that the company does not have too many investment avenues and is seen in the same way as dividends.

· Long term investors in TCS must keep in mind that buybacks don’t add value per se as what they add in EPS, they lose in PE valuations.