TCS stock nosedives over 3.5% as Rs18,000cr buyback offer turns ex-date today and weak cues

22 Feb 2022 , 11:39 AM

The second most valued Indian company in terms of market capitalisation, Tata Consultancy Services (TCS) was riding on the bears on Tuesday, with steep cuts in stock price that led the IT giant to emerge as the top underperformer on exchanges, thus contributing heavily in dragging markets down. The Tata Group’s star company has been in focus for various reasons.

TCS-led Rs18,000cr buyback offer has turned ex-date today. The last day for participating in the offer was on February 21.

On January 12, 2022, 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.

It needs to be noted that this buyback is 12.5% higher than TCS’ previous buyback programme.

TCS has fixed Wednesday, February 23, 2022, as the Record Date to determine the entitlement and the names of the equity shareholders who shall be eligible to participate in the Buyback.

A buyback offer comes with great advantages for a company. Some of them 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.

At around 11.24 AM, TCS was trading at Rs3605.05 per piece down by Rs115.20 or 3.10% on BSE. At the current price level, the TCS market cap was over Rs13.33 lakh crore. The stock has touched an intraday low of Rs3587 per piece – resulting in a 3.6% drop so far in today’s trade.

TCS has been on the downside tone since the start of this week’s trading session following the buyback offer, however, weak global cues due to Russia and Ukraine tension also squeezed the tone of the market and led to broad-based selloff with the company also facing some heat.

In another development, TCS chief executive Rajesh Gopinathan has completed five years of service on February 21. In his five years of the regime, TCS has made some remarkable milestones. TCS’ revenue has increased to $25 billion in calendar 2021 from $18.5 billion in 2017. The company’s market cap has more than doubled to a breathtaking $200 billion as of September 2021 from April 2018 levels of $100 billion.

TCS had already re-appointed Gopinathan in October last year as the MD and CEO for the next five years starting from February 2022 to 2027.