Monday's Bull! TCS stock skyrockets over 2.6% outrunning broader markets after board fix Feb 23 as record date for Rs18,000 crore buyback

14 Feb 2022 , 01:28 PM

The broader markets were weak on Monday tracking selloff of global cues as geopolitical tension involving Russia and Ukraine sends a shiver across investors and the appetite for equities takes dive deeply. However, one particular stock on Indian markets outperformed not just sectors, broader indices but also benchmarks Sensex and Nifty 50 too. It would be the mighty stock backed by Tata Group, Tata Consultancy Services (TCS). Investors were upbeat on TCS as the company fixes a record date for its upcoming Rs18,000cr buyback programme.

At around 1.17 pm, TCS was trading at Rs3736.55 per piece up by Rs40.95 or 1.11% on Sensex. Notably, so far today, TCS stock has risen by more than 2.6% with an intraday high of Rs3794.15 per piece on Sensex.

TCS stock remains on the top place of best performers in today’s trading session on BSE and NSE both.

On February 12, TCS announced that the company has fixed Wednesday, February 23, 2022, as the Record Date for the purpose of determining the entitlement and the names of the equity shareholders who shall be eligible to participate in the Buyback.

TCS buyback is among the most-awaited in the markets.

Last month, on 12th, when TCS presented its financial performance of the third quarter for FY21, the board of directors of the company approved a buyback of 4,00,00,000 fully paid-up equity shares of the face value of Re1 each at Rs4,500 per equity share.

The total buyback size is aggregated to Rs18,000cr.

A Buy-Back is a corporate action and is occasionally practised where a respective company buys back its shares from the existing shareholders usually at a price higher than the market price. When it buys back, the number of shares outstanding in the market reduces.

Buyback allows companies to invest in themselves. By reducing the number of shares outstanding on the market, buybacks increase the proportion of shares a company owns.

Among many advantages of buyback carried by companies are – to improve earnings per share; to improve return on capital, return on net worth and to enhance the long-term shareholders’ value; to provide an additional exit route to shareholders when shares are undervalued or thinly traded; to enhance consolidation of stake in the company; to return surplus cash to shareholders; to achieve optimum capital structure; and also to support share price during periods of sluggish market condition.

Indian markets were bleeding in red during Monday’s trade due to weakening in global markets as concerns over the Russian invasion of Ukraine fuels panic profit booking and crude oil reaching a multi-year high. A broad-based sell-off was witnessed across indices on exchanges BSE and NSE with Sensex diving to near 56,600-level and Nifty 50 even reaching near 16,900-level. The performance also comes after major Q3 earnings and India’s factory output that has clocked to a 10-month low. Further, investors now await India’s CPI inflation data for January month which will be announced later today.