Tata Consultancy Services (TCS) had approved to buy back 4 crore shares through a tender offer at a price of ₹4,500 per share resulting in a total offer size of ₹18,000 crore. The record date has been fixed on February 23, 2022 for the purpose of determining the entitlement and the names of the equity shareholders who shall be eligible to participate in TCS share buyback.
“Due to ongoing Russia Ukraine crisis, dollar index is expected to fall sharply. So, export-oriented IT companies are going to benefit from this Russia Ukrain conflict. As TCS is one of the larger export-oriented IT company, it is going to benefit a lot from the recent developments. At this time, announcement of share buyback would further fuel demand for TCS shares. So, one can expect this IT stock to hit ₹4200 levels in next one month,” said Ravi Singhal, Vice Chairman at GCL Securities.
TCS, which has been going through some corrections recently is a great long-term bet in the IT sector in India. Not only does the stock have a great deal flow lined up but is also a relatively undervalued and a safer bet in the IT sector, being a large-cap, as per analysts.
“The company is buying back the shares at a 20% higher price than the market and we can expect a 50-70 acceptance ratio. The great opportunity on buyback price arbitrage and excellent long term prospects make the TCS buyback a win-win opportunity for investors,” said Sonam Srivastava, Founder, Wright Research, SEBI Regd. RIA.
The IT stock has fallen over 6% in the past five sessions ahead of record date of its share buyback.
“The buyback was an opportunity for existing long-term shareholders to arbitrage from tendering the shares. Depending on the acceptance ratio, small shareholders had a high probability to benefit from this offer, considering 15% reservation in this offer. The recent fall in IT stocks present a good opportunity for investing in the company. We believe that blockchain, cloud, digitization, analytics, cyber security, automation will increasingly get large budget allocations from customers and will benefit large companies like TCS over the next few years,” said Divam Sharma, Co-founder of Green Portfolio, SEBI registered Portfolio Management Services.