Shares of Tata Consultancy Services (TCS) were the lone gainer on the 30-share Sensex on Monday, as all stocks traded negative amid multiple factors including geopolitical tensions between Russia and Ukraine.
TCS stock jumped more than 2% in early trade to hit the day’s high of Rs 3,794.15 per share on BSE after Tata Consultancy Services set February 23, 2022, as the record date to determine the right of shareholders who will be eligible to participate in its redemption of Rs 18,000 crore.
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As of 11:15 a.m., shares of the IT giant were trading with a gain of Rs 64.40 or 1.74% above Rs 3,760 per share on BSE.
“The members of the company have approved the buyout by passing a special resolution by mail vote. The record date for the purposes of determining the entitlement and names of shareholders who will be eligible to participate in the buyout,” the company said. in an ESB file on Saturday, February 12.
India’s largest IT company, Tata Consultancy Services (TCS), has announced a takeover offer of Rs 18,000 crore. The IT major will repurchase 4 crore shares worth Rs 18,000 crore at a price of Rs 4,500 per share.
What is a share buyback?
Buyout is a corporate action in which a company buys back its shares from existing shareholders, usually at a price above the market price. When the company redeems its shares, the number of shares outstanding in the market decreases. A buyout allows companies to invest in themselves. By reducing the number of shares outstanding in the market, buybacks increase the proportion of shares owned by a company.
“After the repurchase, the outstanding share will decrease by 1.08%. Due to the sheer size of TCS, the repurchase of Rs.18,000 crore will have a slight increase in EPS. However, the company’s commitment to add shareholder value in the growth and return of capital is appreciable. A short-term investor can look at the opportunity, while long-term investors can latch onto it,” said Vinod Nair, research manager at Geojit Financial Services, when the IT company announced the bid.