CHENNAI:Tata Consultancy Services said on Monday that its shareholders have approved a share buyback proposal mooted in February for a whopping Rs 16,000 crore.
With IT firms looking to increase the amount of money returning to investors, either through share buybacks or increased dividends, TCS’ buyback plan is the largest in the Indian IT industry to date. It could also be the largest share buyback plan in the history of the Indian capital markets, beating Reliance Industries’ buyback operation of Rs 10,440 crore between February 1, 2012 and January 19, 2013.
According to TCS, whose fourth quarter results for FY16-17 are due this week, the buyback programme was passed through a special resolution with 99.81 per cent of total of valid votes cast in favour. The shares under the buyback represent 2.85 per cent of the total paid up equity share capital at Rs 2,850 per equity share. In February, the TCS board had approved the proposal to buy back up to 5.61 crore equity shares for an aggregate amount not exceeding Rs 16,000 crore.
Indian IT firms, according to analysts, are beginning to increase cash returns to investors as the global environment and demand situation place increasing uncertainty on growth. Infosys, during its results announcement last week, said that it would return as much as $2 billion (Rs 12,883 crore) to shareholders over the next financial year through either share buybacks or dividends. Meanwhile, Wipro is also said to be mulling a share buyback worth Rs 4,000 crore and HCL Tech announced in March that it would buy back shares worth Rs 3,500 crore over FY17-18.
TCS is expected to follow Infosys in posting underwhelming results for the last quarter of the last financial year, with some analysts predicting that profits would decline by around 2 per cent sequentially in rupee terms. TCS stock closed Rs 7 or 0.30 per cent down at Rs 2320.85 on BSE at end of the trading day on Monday.