Tata Consultancy Services (TCS), a leading IT major, recently made an announcement regarding its latest buyback offer, which has caught the attention of investors. The company plans to buy back up to 4,09,63,855 fully paid-up equity shares at a price of Rs 4,150 per share, representing an 18.5% premium to the closing price on Friday. This buyback constitutes 1.12% of the company’s equity.
The buyback offer, executed through the tender offer route, allows the company to fix a specific price at which shares are bought back from investors. TCS has set November 25 as the record date, meaning to avail of the offer, investors must own TCS shares in their demat accounts on or before this date.
Analysts have shared their perspectives on the TCS share buyback. According to Prashanth Tapse, a Research Analyst at Mehta Equities, short-term traders have the opportunity to generate decent returns by buying TCS shares before the record date. Based on the buyback price of Rs 4,150, short-term investors could achieve a 18% return on investment, taking advantage of the tax exemption on the income generated from the buyback.
Moreover, Tapse advises investors to buy at least 48 shares to maximize their entitlement under the Rs 200,000 retail category. In the long term, Tapse remains optimistic about the IT sector and believes that TCS, along with Infosys (INFY), will remain favorite counters for investors.
From a technical standpoint, Jigar S. Patel, a Senior Manager of Equity Research at Anand Rathi, also highlights the potential rewards of investing in TCS. If the stock sustains above Rs 3,550, it could reach up to Rs 3,700 per share. Patel notes that TCS has shown upside momentum in recent trading sessions, and if it manages to penetrate and sustain above Rs 3,550, a further increase towards Rs 3,650-3,700 can be expected within a few weeks.
Therefore, even if your shares are not fully accepted in the buyback, there is still potential for the stock to reward potential investors. As always, it is recommended to consult with a financial advisor or conduct thorough research before making any investment decisions.
Frequently Asked Questions (FAQ)
1. What is the record date for TCS buyback?
The record date for TCS buyback is November 25, 2023.
2. How can I avail the buyback offer?
To avail the buyback offer, you need to own TCS shares in your demat account as on the record date of November 25. The share price of the company will adjust for the buyback price on the ex-date.
3. What are the potential returns for short-term investors?
Based on the buyback rate of Rs 4,150, short-term investors have the opportunity to generate around 18% return on investment.
4. Are the returns from the buyback tax-exempt?
Yes, the income generated from the buyback of shares is tax-exempt, providing investors with additional advantages.
5. What is the technical outlook for TCS?
If TCS manages to sustain above Rs 3,550 on a daily basis, it has the potential to reach Rs 3,650-3,700 per share within a few weeks.