TCS likely to announce mega share buyback offer today

New Delhi: Shares of India’s biggest IT company Tata Consultancy Services Ltd (TCS) traded higher on Friday ahead of the company’s decision on share buyback proposal. TCS in a filing with the BSE on Tuesday had informed that its board will consider a proposal for buyback of equity shares at a meeting on Friday. Domestic brokerage Motilal Oswal Securities, which has a neutral rating on TCS shares, anticipates a buyback in the range of Rs20,000 crore.

Also on Tuesday, TCS had informed that it has expanded its agreement with M&G Prudential, the UK and European savings and investments business of Prudential, The agreement has now been expanded and is worth an additional $668 million over the term of the contract.

TCS shares have outperformed the market so far this year, rising over 30% year to date. India’s biggest IT company had last year announced a Rs16,000 crore buyback and this year followed it up with a bonus issue of shares. Other big IT companies, Infosys Ltd and Wipro Ltd, had also announced share buyback offers.

Analysts say that the share buybacks typically improve earnings per share and return surplus cash to shareholders while also supporting stock price during sluggish market conditions.The top three stocks on mutual funds’ large-cap shopping cart were Housing Development Finance Corp. Ltd (HDFC), Infosys and HCL Technologies Ltd. In the same month, they trimmed some exposure in sector leader TCS given the strong momentum in the stock.

At 9.46am, TCS shares were up 0.70% at Rs1,804.75 per share on BSE.

TATA Consultancy Services ( TCS )