TCS share buyback offer is open

Tata Consultancy Services or TCS, considered to be one of India’s largest IT services firm’s share buyback programme of up to 16,000 crores at a price of 3,000 per share is open. 

Last month, TCS stockholders had supported a proposition to buy back up to 5.3 crore shares of the corporation, holding a face value of 1 each at ₹3,000 per scrip. Should investors offer or not depends upon their investment horizon, say, analysts. The buyback offer will terminate on January 1. 

Jyoti Roy – DVP- Equity Strategist at Angel Broking says that whether an investor should tender or not depends on the investment horizon. We would recommend investors with a prolonged-term investment horizon of more prominent than one year to carry on to the stock given heavy demand growth anticipated for IT services due to increased adoption of digital technologies, this was apparent from Accenture Q1FY2021 numbers which appeared in above street estimates due to higher demand for outsourcing which is positive for India IT firms. Post the Accenture numbers we presume a rerating for Indian IT companies.

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Accenture’s first-quarter income growth of 2% year-on-year inconsistent currency terms was enormously ahead of its guided range of -3% to 0%. Further, Accenture’s new bookings for the three months closed in November, improved by 25% year-on-year to $12.9 billion.

Analysts say that large Indian IT firms tend to imitate Accenture’s executions with some lag. The company promotes a September-August financial year. For TCS share investors with a short term horizon, Roy recommends going for the offer.

She further says, “Investors with a short term investment horizon in TCS shares can tender their share in the buyback given the fact that there would be no tax liability in the investor tendering their shares in the buyback.”

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