TCS Buyback: Tata's IT Stock Hits New 52-Week High Ahead Of Buyback Bids Settlement: Buy, Sell, Or Hold?

Tata Group-backed flagship company, Tata Consultancy Services was in a huge rally on Tuesday as much as the share price hit a new 52-week high of Rs 3,699 apiece. The stock has gained by more than a per cent. The bullish tone comes ahead of the company's finalisation of the acceptance ratio and bid settlements for its buyback worth Rs 17,000 crore which is scheduled later this week.

On BSE, at the time of writing, TCS shares traded at Rs 36,81.25 apiece, up by Rs 39.05 or 1.07%. The stock was near its intraday high of Rs 3,699 apiece.

As per the letter of offer of the buyback, TCS had announced that the last date for providing Acceptance/Non-acceptance of tendered Equity Shares to the Stock Exchange by the Registrar is scheduled on December 13th.

Meanwhile, the last date of settlement of bids on the Stock Exchange will be on December 14th, which will also be the last date for dispatch of share certificate(s) by the Registrar/return of unaccepted demat Equity Shares by Stock Exchange to Seller Member/ Eligible Shareholders. Finally, the last date of extinguishment of Equity Shares is scheduled for December 26th.

However, the latest report of MoneyControl which cited several investors who tendered their shares, stated that TCS has determined the acceptance ratio of its buyback issue at around 35%.

If that is the case, then the latest buyback acceptance ratio is higher from 24% in last year's buyback.

TCS launched its Rs 17,000 crore buyback from December 1st to 7th. On the final day, the buyback was oversubcribed by 6.5 times with bids of more than 26 crore shares against the offered size of 4.09 crore shares. On this day, TCS shares had ended at Rs 3,616 apiece.

The 2023 buyback floor price was set at Rs 4,150 apiece.

The last buyback offer by TCS was of Rs 18,000 crore in 2022, which was oversubscribed by 7.5 times. In this buyback, investors offered 30.12 crore equity shares at the buyback price of Rs 4,500 per share, against the buyback size of 4 crore shares.

Should you buy TCS shares?

Last week, Chola Securities in its note said that TCS has been in a consolidation phase for months now. However, in short-term time frame; higher low pattern formation is intact. The stock has been sustaining above all the short-term moving averages; indicating strength in the price. Meanwhile, on a weekly basis, the stock is trading inside a channel pattern. Furthermore, the stock's momentum indicator such as RSI is building on strength; indicating price to move upwards and testing the upper band of the channel pattern.

That being said, the brokerage has given a target price of Rs 3,740 apiece on TCS.

Meanwhile, brokerage Sharekhan has set a target price of Rs 4,200 on TCS. While Kotak Institutional Equities has recommended 'ADD' for a target price of Rs 3,760. On the other hand, Motilal Oswal has suggested 'BUY' on TCS for a target price of Rs 4060.

Also, as per the Trendlyne data, the consensus recommendation from 40 analysts for Tata Consultancy Services is HOLD. EPS is expected to grow by 10.4% in FY24.

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 55 years. A part of the Tata Group, India's largest multinational business group, TCS has over 608,000 of the world's best-trained consultants in 55 countries. The company generated consolidated revenues of US $27.9 billion in the fiscal year ended March 31, 2023, and is listed on the BSE and the NSE in India.

TCS is currently the largest IT firm in India, and the second-largest company after Reliance in terms of market share. Currently, TCS m-cap is nearly Rs 13.47 lakh crore.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.