InvestorQ : Why is TCS planning a buyback of shares in its forthcoming AGM on 07 October?
swati Bakhda made post

Why is TCS planning a buyback of shares in its forthcoming AGM on 07 October?

Answer
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Sam Eswaran answered.
2 weeks ago


While there is no confirmation, it has been reported that IT giant TCS board may take a view on the share buyback proposal when it meets for the AGM and results announcement on 07 October, Wednesday. The company has informed the exchanges about the same.

Buybacks are nothing new for TCS, being one of the most cash-rich companies operating in India. It has already done a buyback in 2017 and again in 2018, when the buyback size was around Rs.16,000 crore.

However, after that due to the changed rules on imposition of capital gains tax on buybacks to put them at par with dividends, TCS did not do any buyback of shares in the last two years. TCS continuously tries to return excess cash to shareholders in a tax effective way.

During the Sep-20 quarter, TCS will also be providing Rs.1218 crore as exceptional item for the legal claim filed by Epic Systems in the court of Western District Madison, Wisconsin. Epic Systems had alleged infringement of Epic's proprietary information. The US Court of Appeals had upheld $140 million as damages.

TCS sits on a pile of cash and does not have too many investments to make, making it a ripe candidate for buybacks. In the last 2 years, consistent buybacks has helped the stock to scale to new high prices.