TCS settles at new high; m-cap ends at Rs 8 trillion for the first time

Shares of Tata Consultancy Services (TCS) settled at a new high of Rs 2093.20 per share, up 1.9% from the previous close on the BSE, near their share buyback price of Rs 2,100 per share.

Meanwhile, TCS’s market capitalisation surged past the Rs 8 trillion for the first time on a closing level basis. At the end of the day, TCS with Rs 8.01 trillion market cap was the most valued listed company. Reliance Industries (RIL) stands at second position with a market cap of Rs 7.87 trillion. RIL was the first company to achieve the milestone on August 23, 2018 on a closing level basis. Its market cap touched a high of Rs 8.35 trillion on August 28, 2018.

TCS share buyback offer will open on Thursday, September 06, 2018 and closes on Friday, September 21, 2018. The company plans to buyback 76.19 million shares from the equity shareholders / beneficial owners of equity shares as on August 18, 2018, on a proportionate basis by way of a Tender Offer route through stock exchange mechanism. It has fixed a share buyback at a price of Rs 2,100 per equity share payable in cash for an aggregate consideration not exceeding Rs 160 billion.

TCS said the current buyback is a capital allocation decision taken with the objective of improving the company’s Return on Equity (ROE) and increasing shareholder value in the longer term.

This is the second year in a row when the Mumbai-headquartered firm has decided to go ahead with a share buyback programme in a bid to return excess cash to its shareholders. 

Thus far in the calendar year 2018, TCS has outperformed the market by surging 55% against 13.5% rise in the S&P BSE Sensex. Analysts at Reliance Securities maintain ‘buy’ rating on the stock with a target price of Rs 2,170 per share.

“TCS’ improved visibility in BFSI and Retail, along with healthy outlook in other key verticals drives underlying confidence on the business. With Digital contributing more substantially (25%), healthy growth in this segment will move the needle meaningfully going forward. High payouts (100% of FCF) to shareholders in the form of share buybacks, along with improving business visibility will ensure the stock remains at elevated valuations,” the brokerage firm said in Q1FY19 results update.


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