TCS Buyback - Update - Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking):

"Tata Consultancy Services (TCS), India''s biggest software services provider, approved share buyback plan of up to INR 16,000cr. Promoters of TCS currently hold 73.33% in the company. TCS in a stock exchange filing said that its board approved the buyback of up to 5.61cr shares, or 2.85% of its share capital, at INR 2,850 each. The buyback is proposed to be made from the shareholders of the company on a proportionate basis under the tender offer route using the stock exchange mechanism, it added. The buyback is subject to approval of the members by means of a special resolution through a postal ballot, it said. The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the Buyback Regulations.

The buyback of the shares, is a good indication of the under valuation of the stock in the markets and also is good given that the cash yields are running low and earning yield in IT industry has improved on back of the underperformance of the stock. Also, the Buyback will take out a part of cash out of the books, this will enhance the overall ROE''s as the proportion of the low yielding asset ( i.e. cash ) will be reduced in the balance sheet and hence will reward shareholders. We maintain our ACCUMULATE with the stock price of INR 2700, though in near term the stock will exhibit significant strength around the price of INR 2850."

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2506.5 as compared to the previous close of Rs. 2408.15. The total number of shares traded during the day was 198006 in over 10189 trades.

The stock hit an intraday high of Rs. 2555 and intraday low of 2412. The net turnover during the day was Rs. 493149241.

Source : Equity Bulls

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