TCS shareholders delighted with share buyback and strong growth

  • The computer giant announced a share buyback of 4,500 yen per share, a premium of nearly 17% over the previous closing price.
  • As a result, the company’s shares rose 1.4% and are among the top 5 winners in the benchmark Nifty 50.
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Shares of Mumbai-based IT giant TCS climbed 1.4% when the deal opened as investors applauded the company’s earnings for the December quarter as well as the proposed share buyback.

The software exporter, which topped $ 25 billion in annual revenue, with three months to spare in the fiscal year, has offered to buy back shares at a price of up to 4,500 yen apiece, 17 percent more than Wednesday’s closing price (January 12).

This is not the only reason for the cheer. Sales grew strongly by 4.5% in constant currencies terms (adjusted for exchange rate fluctuations). This compares to Infosys’ 7% and Wipro’s 3% over the same period, i.e. October to December 2021.

The drop in operating margin to 25%, due to rising costs of recruiting and retaining talent, was disappointing but not a concern, Morgan Stanley analysts reportedly said.

“TCS has experienced strong growth and the overall pipeline remains strong. We believe core transformation demand remains strong, which, coupled with exemplary execution, should deliver strong earnings, ”analysts at Edelweiss Research said.

Brokerage firms Target price
Morgan stanley ₹ 4,400
Citi ₹ 3,580
Edelweiss research ₹ 5,000

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TCS to repurchase shares worth 18,000 crore for a price of up to 4,500 each

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