The biggest share buyback of TCS so far is coming. The company has fixed the record date for share buyback on 23 February 2022.
Should You Participate TCS Share Buyback: The country’s largest IT company Tata Consultancy (TCS) is bringing a good opportunity for those investors who have shares of the company. The biggest share buyback of TCS so far is coming. The company has fixed the record date for share buyback on 23 February 2022. In share buyback, the company has fixed a price of Rs 4500 per share, which is about 20 percent premium in terms of current price. Let us tell you that last month, when the company released its results for the December quarter, during the same time it was said to bring a share buyback of Rs 18000 crore. The question arises whether investors should participate in this buyback.
what should investors do
Brokerage house Motilal Oswal says on TCS buyback that its approval ratio can be between 30-50 percent. That is, if you offer 10 shares, then the company can buy 3 to 5 shares from you. This one which can give 5-9 per cent (pre-tax) return in 1-2 months. The brokerage house says that if you want to make money from the market in the short term, then you can participate in this buyback offer. Only those who will have shares of the company till February 23 can take part in this offer. Retail investors can offer a maximum of 44 shares, which will cost Rs 2 lakh at 4500 per share.
The company will buy 4 crore equity shares
Under the buyback, TCS will buy 4 crore equity shares from investors. This is the company’s fourth and biggest buyback offer 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 know 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. These shares cease to exist after the buyback process is completed. 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 are sold at a higher price than the market price. Like the share of TCS is around Rs 3800. At the same time, the price for buyback has been fixed at Rs 4500 per share. If we look at the current price, then investors are getting Rs 700 or about 20 percent profit on each share.
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 run, the share price can even cross the buyback price. In such a situation, you should take part in buyback after thinking carefully or after taking advice from experts.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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