Tata Consultancy Services (TCS) is an Indian multinational IT company providing the services like IT, business consulting and outsourcing services, operational in 46 countries. TCS is one of the largest Indian companies with the market capitalization of $80 billion. It got ranked at 10th position in the Fortune India 500 list. Recently the company has planned a buyback offer i.e a repurchasing of its shares, after receiving some suggestions from the investors and shareholders for the certain dividend policy and investing surplus cash through a share buyback. The offer was approved by the shareholders of the company with the 99.81 percent of casted votes being in favor of the offer.
It is the biggest offer proposed by the TCS so far, worth Rs. 16,000 crore. The shares will be reissued and repurchased for the price of Rs 2,850 per share while it was ₹2,506.50 before the announcement of this plan, on February 20. The shares to be bought back amounted to 2.85% of the total shares of the company. This is the first buyback plan of this company.
TCS is the highest ranked IT Company of India. The company has released its fourth quarter results ended March 31, 2017, according to which the net profit is Rs 6,778 crore with nearly 11 percent growth on a year-on-year basis and 2.9 per cent growth on a sequential basis while the revenue is up by 8.7 per cent at Rs 29,735 crore year-on-year and grew 1.5 per cent quarter-on-quarter.
Earlier, the business rivals of TCS like Infosys, Wipro, Cognizant, and HCL had also planned their buyback plans this year while some other Indian IT companies like Wipro and Tech Mahindra prefer to stay away from these type of offers due to lower amounts of cash.
A buyback, also known as a repurchase, is the purchase by a company of its outstanding shares that reduces the number of its shares on the open market. Companies buy back shares for a number of reasons, such as to increase the value of shares still available by reducing the supply of them or eliminate any threats by shareholders who may be looking for a controlling stake.