TCS Buyback Should you tender shares?

Reading Time: 3 minutes

Tata Consultancy Services Ltd. has announced a buy back on proportionate basis through tender offer, which was approved in the board meeting held on October 7, 2020. This will be its third buyback plan after ones amounting to Rs 16,000 crore each in 2017 and 2018.

Buyback Details

Buy Back Size (In Cr.)

16000

Number of Shares (In In Cr.)

5.33

Buyback Offer Size

1.42%

FV (In Rs.)

10

Buyback Price (In Rs.)

3000

Buyback Opening date

December 18, 2020

Buyback Closing date

January 1, 2021

Record Date

November 28, 2020

About TCS

Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world’s largest businesses in their transformation journeys for over 50 years. TCS offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. This is delivered through its unique Location TM Independent Agile delivery model, recognized as a benchmark of excellence in software development. A part of the Tata group, India’s largest multinational business group, TCS has over 448,000 of the world’s best-trained consultants in 46 countries. The company generated consolidated revenues of US $22 billion in the fiscal year ended March 31, 2020.

Also Read on FinMedium:  The Low Hanging Fruits of Sensible Investing

Financials

(In Cr.)

Sep-20

Jun-20

Mar-20

Dec-19

Sep-19

FY 19-20

Revenue

33,365

31,624

33,222

33,040

32,387

1,31,306

Total Income

35,099

32,330

35,255

34,246

35,025

1,39,388

PBT

9,698

8,443

10,351

9,774

10,869

41,991

Tax

-2,250

-2,347

-2,124

-2,091

-2,233

-8,731

Net Profit

7,448

6,096

8,227

7,683

8,636

33,260

Equity

375

375

375

375

375

375

EPS

19.85

16.25

21.92

20.47

23.02

88.64

NPM %

22.32

19.28

24.76

23.25

26.67

25.33

*Consolidated Data

Pre-Buyback shareholding pattern as on Record date

Minimum Acceptance Ratio

Shares Reserved for Retail (Cr)

0.80 (15% of 5.33)

Total Retail Shares (Cr.)

12.16

Minimum Acceptance Ratio Retail

6.5%

Non – Retail Sahres

4.53 (85% of 5.33)

Minimum acceptance Ratio Non-Retail (Approx.)

1.25%

  1. To be eligible for the buyback the investor should have shares of Tata Consultancy Services Limited (TCS) in demat or physical form as on record date, November 28, 2020.
  2. Then on January 12, 2020 the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.
  3. Investment should be less than equal to Rs. 2 Lacs to qualify as retail Investor.
  4. Final Acceptance ratio for retail and non-retail category is calculated as the ratio of Number of shares offered in each category divided by Total number of shares tendered in each category.
  5. 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.
Also Read on FinMedium:  Exciting News For Free, In Exchange For Your Attention

Sharp increase in shareholding of retail investor in the run up to record date – this will lead to less number of shares accepted.

Profit from Buyback based on acceptance ratio

For Retail Investors =2,00,000/3000=66

Buy 66 Shares at Rs.2820 (Approx. closing of 21 Dec)

Acceptance Ratio

33%

50%

75%

100%

Amount Invested in Buyback

186120

186120

186120

186120

No. of Shares buyback

21

33

49

66

BuyBack Profit

3780

5940

8820

11880

Profit

2.03%

3.19%

4.74%

6.38%

Source Link

Disclaimer

Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the FinMedium or its members. The presentation of material therein does not imply the expression of any opinion whatsoever on the part of the FinMedium concerning the legal status of any company, country, area, or territory or of its authorities. For more info. please read our ToU & Privacy Policy here. If you have any concerns regarding this post, please reach out to us at finmedium@gmail.com


Adroit Financial

Adroit Financial

SEBI Registered PMS Advisor - INP000005349
Please Share Now :)