TCS Rs 17,000 Crore Buyback Last Day: How Investors Can Benefit From This Buyback Offer? Find Out!

Tata Group-backed Tata Consultancy Services (TCS) has finally broken out from Rs 3,500 levels and crossed the Rs 3,600 mark on December 6th, a day before the closing of its Rs 17,000 crore buyback offer. On Thursday, TCS shares will be in focus as it is the last day for tendering in its buyback offer.

TCS Buyback:

This Tata buyback opened on December 1st and will close on December 7th. Under the Rs 17,000 crore buyback, TCS is offering 4.09 crore equity shares at a face value of Re 1 each. The size of the buyback is up to Rs 17,000 crore. For the buyback, TCS has fixed a floor price of Rs 4,150 per piece.

The ratio for buyback for small shareholders is fixed at 1 equity share for every 6 equity shares held as of the record date, November 25th. For other general category shareholders, the buyback ratio comprises 2 equity shares for every 209 equity shares held as of the record date.

TCS Share Price:

The tech giant's share price on Wednesday ended at Rs 3,603.35 apiece, up by 2.08% on BSE with a market cap of Rs 13,18,484.28 crore. TCS share is nearing its 52-week high of Rs 3,680 apiece.

Currently, TCS shares are trading at a discount of a little over 13% from its buyback floor price.

Year-to-date, TCS shares gained over 10.5% on BSE.

How To Benefit From TCS Shares?

According to ICICI Direct note, if you plan to benefit from TCS's recent buyback announcement, here is how can you do it. The cutoff price for retail investors is Rs 2 lakh. It means that at Rs 3,500, the maximum number of shares you can buy back is 57. If we look at the acceptance ratio of the 2022 buyback, it was 24%.

Assuming the same acceptance ratio this time around, with 57 shares in the Demat account on the record date, TCS may accept 13 shares at Rs 4,150. The net profit would be 650 * 13 = Rs 8,450. You will still have 44 shares in your Demat account, and the actual profit will depend on at what price you decide to sell them, the brokerage added.

This similar example can be used to understand gains in TCS buyback against the current market price.

TCS Buyback History:

The brokerage highlighted that the current buyback is TCS's fifth buyback program in the last six years. The company first started its buyback program in 2017 when it announced the Rs 16,000 crore buyback, offering a premium of 18%. TCS continued announcing its buyback programs in the coming years.

Furthermore, TCS announced buybacks worth Rs 16,000 crore each in June 2018 and October 2020, offering premiums of 18% and 10%, respectively. The most recently concluded buyback took place in January 2022. TCS decided to repurchase shares valued at Rs 18,000 crore, with a premium of 17%.

Among many key reasons for buyback are --- to improve earnings per share; improve return on capital, return on net worth and to enhance the long-term shareholder value; provide an additional exit route to shareholders when shares are undervalued or are thinly traded; provide an additional exit route to shareholders when shares are undervalued or are thinly traded; enhance consolidation of stake in the company; prevent unwelcome takeover bids; return surplus cash to shareholders; achieve optimum capital structure; support share price during periods of sluggish market conditions; and service the equity more efficiently, as per BSE FAQs.

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