TCS' Rs 17,000 crore share buyback to open on December 1

The Rs 17,000 crore-share buyback programme of India's top software services exporter Tata Consultancy Services (TCS) will open on December 1.

The buyback, where investors can sell to the company their shares at an offer price of Rs 4,150 apiece, will close on December 7, TCS said in a regulatory filing on Tuesday.

The information technology bellwether is aiming to repurchase up to 4.09 crore shares (1.12 per cent of the total equity share capital) at Rs 4,150 apiece in a buyback valued at Rs 17,000 crore.

For small shareholders, as defined by those with investments less than Rs 2 lakh, the entitlement ratio has been fixed at 1 share for every 6 shares held on the record date of November 25.

For other qualifying shareholders, the entitlement ratio is set at 2 shares for every 209 shares held.

"The company believes that the buyback is not likely to cause any material impact on the profitability or earnings of the company except to the extent of reduction in the amount available for investment, which the company could have otherwise deployed towards generating investment income," TCS said.

"The company believes that the buyback will not impact the growth opportunities of the company," it added.

Tata Sons Private Ltd, which holds 26.45 crore of 72.27 per cent of TCS, intends to tender 2.96 crore equity shares.

Tata Investment Corporation Ltd intends to tender 11,358 shares out of 10,14,172 crore shares it holds in the company.

The total buyback size is 4,09,63,855 shares.

Assuming the response to the buyback is to the extent of 100 per cent from all the shareholders up to their entitlement, the aggregate shareholding of the promoters will increase to 72.41 per cent as against 72.3 per cent now.

TCS said it shall not raise further capital for a period of one year, from the expiry of the buyback period, except in discharge of subsisting obligations.

Last year, TCS had conducted a share buyback when it repurchased shares at Rs 4,500 apiece, totalling Rs 18,000 crore.

Its three earlier buybacks in 2020, 2018, and 2017 were worth Rs 16,000 crore each.

TCS bought back its shares for the first time in 2017 at an 18 per cent premium to the prevailing price.

This was followed by two buybacks of Rs 16,000 crore each in June 2018 and October 2020, at an 18 and 10 per cent premium, respectively.

The last buyback was in January 2022 when the company bought shares worth Rs 18,000 crore at a premium of 17 per cent.

Company shares closed at Rs 3,470.45 apiece on the BSE against the offer price of Rs 4,150.

TCS estimates that the buyback will lead to an increase in its EPS (Earnings Per Share) from Rs 58.52 to Rs 59.18 on a standalone basis.