Tata's Giant: 1000 Shares Of TCS Potentially Gives Rs 3.12 Crore Returns In 19 Years; Bonus, Dividends Added!

Tata Group-backed behemoth Tata Consultancy Services is a perfect example of compounding returns in a share price for the long term. 19 years ago, Tata's tech giant went public in August 2004. If investors bought 1,000 shares of TCS during the listing period, they would likely become a crorepati by now. Because, as per calculations, TCS has given over Rs 3.12 crore returns to these investments in 19 years. The gains include bonus shares and dividends as well!

TCS is in focus this week ahead of its buyback plan of Rs 17,000 crore for which it has set November 25th as the record date. Also, the company has announced that it will make provisions of $125 million in its exceptional items for the third quarter of FY24 due to a lawsuit related to EPIC Matter.

On November 22nd, TCS shares stood at Rs 3,529.85 apiece, up by 0.6% on BSE with a market cap of Rs 12,91,590.25 crore. TCS is the largest IT firm and second largest Indian company after Reliance in terms of market share.

TCS has made a long journey in 19 years. Established in 1968, TCS was corporatized into a separate company with effect from 1st April 2004. Following a hugely successful IPO in July 2004, it was listed on the NSE and BSE, in India, on August 25, 2004.

Tata Group launched TCS IPO from July 29th to August 5th of 2004 to raise to Rs 4713.47 crore. The company offered 4,99,07,340 equity shares at an issue price of Rs 850 apiece. The IPO was listed at a premium of 26.6% at Rs 1,076 apiece on exchanges BSE and NSE.

So let's suppose if anyone bought 1000 shares of TCS on August 25, 2024. Here's how much investors will gain up till now:

As per the TCS calculator, the estimated purchase price of TCS shares will be Rs 987.50 per equity share -- totalling to purchased value of Rs 9,87,500 for 1000 shares.

Now, the status of your TCS shares would be 8,000 shares, while the market price has increased to Rs 3,529.85 apiece on BSE. Further, your TCS shares' current market value would come around over Rs 2.82 crore, and dividends received to the tune of Rs 39.7 lakh.

The increase of 1000 shares to 8000 shares is due to bonus shares that the company carried.

Taking all of these into consideration, the value of investment comes to around Rs 3.22 crore -- while excluding the purchase value -- your returns will be around Rs 3.122 crore. Since listing, the return on investment in TCS shares has been a whopping 3161.65% to date.

(Sources: TCS Data)

TCS Bonus Shares, Dividends:

Since August 2004, TCS has issued bonus shares in the ratio of 1:1 each on three different occasions such as July 2006, June 2009, and May 2018.

Notably, TCS has not announced any split in face value as of now. But it has declared a huge number of dividends.

TCS first began rewarding shareholders with dividends in October 2004, and since then, it has delivered a total of 81 dividends. As per Trendlyne data, in the last 12 months, TCS paid a total dividend of Rs 117 per share. On the current market price, TCS's dividend yield is at 3.31%, among the highest-yielding stock in the IT sector and large-cap space.

Overall, TCS shares highest price level is Rs 4,045.50 which was recorded on January 18, 2022. Meanwhile, the latest 52-week high and low of TCS shares are Rs 3,680 and Rs 3,070.30 respectively.

In the second quarter of FY23, TCS posted a consolidated net profit of Rs 11,342 crore, which is attributable to the shareholders of the company. The Q2FY24 PAT witnessed single-digit growths of 2.4% QoQ and 8.7% YoY. On the top-line front, consolidated revenue from operations stood at Rs 59,692 crore, rising by a fractional 0.5% from Rs 59,381 crore in Q1FY24, but witnessed a growth of 7.9% from Rs 55,309 crore in Q2 of FY23. In constant currency, the revenue growth came in at 2.8% YoY. However, dollar revenue was $7.2 billion for the quarter, declining by 0.2% sequentially which is for the first time since the April-June quarter of FY20.

In its November 2023 value-guide report, brokerage Sharekhan said, "We believe the company with its strong domain expertise, diversified geographical presence, ability to cross-sell makes it well-positioned to win cost optimization and transformational deals and tide over the uncertain macro environment. Hence, we maintain our Buy rating on TCS with an unchanged PT of Rs. 4,200 (valued at Sep 25 FY25E EPS)."

Earlier, Sharekhan's note had said, "The Rs 17000 crore buyback represents 1.12% of the company's equity. The buyback size and price are lower than the street and our expectations. While the near-term outlook continues to remain uncertain the buyback should support the company stock price should the macro deteriorate further. We believe the company with its strong domain expertise, diversified geographical presence, and ability to cross-sell makes it well-positioned to win cost optimisation and transformational deals and tide over the uncertain macro environment."

TCS shares still have the potential for a nealry 19% upside going forward, taking into consideration Sharekhan's target price and current price level.

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.