TCS Considers Share Buyback

Tata Consultancy Services (TCS), India”s largest IT firm by valuation, is considering repurchasing its shares. The company acknowledged this in a BSE exchange filing on Friday, saying the board of directors meeting on October 11 will consider the proposal. If approved, it would be the company”s fourth share buyback since 2017.

TCS has not disclosed the number of shares it plans to buy back or the amount of money it is willing to spend. In 2020, the company repurchased shares worth Rs 160 billion.

The move comes as Indian IT companies face a deal crunch in key markets such as the US and Europe, which are grappling with macroeconomic headwinds. Investors are eagerly looking for any signs of recovery in deal signings, as this could help improve share prices. In this scenario, experts say investors may choose to return their shares when the share buyback begins.

In the first quarter of FY24, TCS reported a net profit of Rs 11,120 crore, up 16.8% from the same period last year. However, on a quarter-to-quarter basis, the company”s net profit fell 2.7% from Rs 11,436 crore in Q4FY23.

In the June quarter, the company distributed an interim dividend of Rs 9 per equity share with a face value of Rs 1. However, analysts are skeptical about the company”s outlook, as TCS CEO K Krithivasan has admitted that North America demand may dip in the coming quarters due to economic headwinds, despite the company”s better results in the first quarter of the current fiscal.

TCS shares are currently trading at Rs 3,620.20 on BSE, up 11.03% year-to-date and 16.60% in the past year. Companies opt for share buybacks to reduce the number of shares in the market, which in turn increases the value of the remaining shares and benefits existing shareholders.