TCS Will Spend Rs 16,000 Cr To Buyback Shares At Rs 3000/Unit: 3 Benefits Of Share Buyback

After Wipro, India’s biggest IT services firm: TCS has announced one of the biggest share buyback program, worth Rs 16,000 crore.

What are the details of the share buyback program? And what are the benefits of share buyback for any listed company?

Keep reading to find out more!

TCS Announces Rs 16,000 Crore Share Buyback Program

TCS has announced that they will buyback 5,33,33,333 shares from existing investors, and for that, they will spend whopping Rs 16,000 crore.

Under the buyback program, TCS is willing to spend Rs 3000 per share.

After a voting among all shareholders, 99.57% of the shareholders approved the buyback program, and gave a green signal for the same.

In a regulatory filing, TCS said, “…the company has fixed Saturday, November 28, 2020, as the Record Date for the purpose of determining the entitlement and the names of the equity shareholders who shall be eligible to participate in the Buyback,”

Rajesh Gopinathan, TCS chief executive and managing director has confirmed this development.

Last year, TCS had announced a special divident of Rs 40 per share, and and in 2018 too, they had announced a share buyback program of Rs 16,000 crore.

A year before that, in 2017, TCS had announced another share buyback.

TCS had a cash reserve of Rs 58,500 crore.

Why Share Buyback: 3 Benefits

Instead of giving straight dividents, listed companies often buyback shares from the investors. Here are three benefits:

• By buying back the shares, the company is able to retain more control over their company. Hence, in this buyback program, TCS will buy 53.33 lakh shares, and this means more control over their own company.
• Share buyback is a means to provide incentives to the shareholders, and give the capital back to them. By buying shares at a higher rate than the market price, TCS is providing a bonus to all loyal shareholders and investors. 
• Share buyback can also help the listed company to strenghten their market position, and help the stock price gain more value. When a large number of shares are bought, then the value of the shares rise.

We will keep you updated, as more details come in.