TCS to commence share buyback of Rs 16,000 cr from May 18

The buyback, if successful, will surpass RIL's 2012 share repurchase of Rs 10,400 crore

India's largest software services firm Tata Consultancy Services (TCS) will commence its Rs 16,000-crore mega buyback offer from May 18.

The buyback programme, which received shareholder approval last month, will open on May 18 and close on May 31, the company said in a regulatory filing.

TCS will dispatch the Letter of Offer for the buyback to eligible shareholders on or before May 16, it added.

The share buyback, if successful, will be India's biggest, surpassing Reliance Industries' 2012 share repurchase of Rs 10,400 crore (Rs 104 billion).

Share buybacks typically improve earnings per share and return surplus cash to shareholders while also supporting share price during periods of sluggish market condition.

The Indian IT companies have been under pressure to return excess cash on their books to shareholders through generous dividends and buybacks.

TCS had earlier said that it received suggestions from investors over the need for certainty on dividend policy along with share buyback to distribute the cash.

The Mumbai-based company has a cash pile of Rs 43,169 crore, which is nearly 10 per cent of the company's market capitalisation.

TCS rival, Infosys has also announced its capital allocation policy to return up to Rs 13,000 crore this financial year through dividend and/or buyback.

Earlier this year, Cognizant announced a$3.4 billion share buyback, bowing to pressure from activist investor Elliott Management Corp.

Smaller peer, HCL Technologies has also approved a buyback of up to 3.50 crore shares worth Rs 3,500 crore (Rs 35 billion).

The proposed shares under the buyback represent 2.85 per cent of the total paid-up capital at Rs 2,850 per equity share.

In February, the board of TCS had approved the proposal to buy back up to 5.61 crore equity shares for an aggregate amount not exceeding Rs 16,000 crore (Rs 160 billion).

In a separate filing, TCS said Vijay Kelkar has ceased to be a Director on the company Board from May 14, in accordance with the retirement age policy of the company.

Photograph: Shailesh Andrade/Reuters