In TCS share buyback, all investors holding shares of the company till February 23 can offer their shares in a defined ratio.
TCS Share Buyback Open Today: The share buyback offer of I sector giant Tata Consultancy Services (TCS) is opening today i.e. on March 9 and it will close on March 23. The company’s board had announced the buyback on January 12. The board of the company had approved a proposal to buy back 4,00,00,000 stock at a price of Rs 4,500 per share for an amount exceeding Rs 18,000 crore. Under this the record date was 23 February. This will be the biggest share buyback of TCS till date. If you are a shareholder and looking to participate in the buyback, then you need to know a few things.
Who can participate in the buyback
All investors holding shares of the company till February 23 can offer their shares in a defined ratio. For buyback, shareholders holding shares worth Rs 2 lakh or less will be considered under the retail category. Whereas those holding shares of more than Rs 2 lakh will be considered in the general category.
Swastika Investmart Ltd. Santosh Meena, head of research, says that TCS buyback is a good opportunity for retail investors. Historically the acceptance ratio has been around 70 per cent and the stock prices cross the buyback price. If we look at the fundamentals, the outlook is bullish. Retail investors should participate in buybacks where we are expecting acceptance ratio between 50-70 per cent. On the other hand, the remaining shares should be held for a longer period.
How many shares can I offer?
It depends on which category you fall into. If you are in the reserved category, then the company will buy 14.61 per cent of your total shares. This means TCS will buy 1 share for every 7 you hold. The buyback ratio will be 1 for every 108 equity shares in the general category.
is it necessary to participate
It is not necessary for the investors to participate in the share buyback. Sometimes the outlook for the stock is strong and in the long term, the share price can even cross the buyback price. In such a situation, one should take part in buyback after thinking carefully or after taking advice from experts.
biggest buyback offer
Under the buyback, TCS will buy 4 crore equity shares from investors. This is the fourth and biggest buyback offer of the company in the last 5 years. The company’s previous buyback offer was of Rs 16000 crores, which opened on 18 December 2020 and closed on 1 January 2021. Let us tell you that usually if there is extra cash in the balance sheet of the company, then they do share buyback. The company uses its surplus cash through share buyback.
How do investors benefit from share buybacks?
When the company buys its own shares from the investors, it is called buyback. Companies bring this offer at a premium to the current price of the share, that is, if the shareholders take part in it, then they get a higher price than the market price by selling the shares. For example, when the share buyback of TCS was announced on January 12, the share price closed at Rs 3857. At the same time, the price for buyback has been fixed at Rs 4500 per share. That is, this buyback has to be completed at a premium of about 17 percent.
(Disclaimer: Advice given here is expert opinion. This is not the personal opinion of The Financial Express. Markets are risky, so take expert opinion before investing.)
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