MUMBAI: Tata Consultancy Services (TCS), India’s second-largest listed company, said on Friday that it plans to repurchase its stock. Its board, led by chairman N Chandrasekaran, will meet on January 12 to consider the share buyback proposal. If approved, it will be the fourth such capital action move by India’s largest software services company in five years since getting listed in 2004. It had paid Rs 48,000 crore through three share buybacks. The company had said earlier that it plans to return at least 80% of its free reserves to shareholders.
The stock repurchase move will make Tata Sons the biggest beneficiary of the gains as it is the IT major’s largest shareholder. Tata Sons holds 72% in the IT giant. TCS ended 1.3% up at Rs 3,855 apiece by close of Friday’s trade on the BSE .
The development comes at a time when Tata Sons is completing purchase formalities of Air India. The long-stop date to complete the Air India deal with the government is January 23. Tata Sons had offered Rs 18,000 crore for Air India – it will take over the Rs 15,300-crore debt of the national carrier and pay Rs 2,700 crore in cash to the government.
Going by TCS’s past share buyback spends (see graphic), if it repurchases Rs 16,000 crore of its stock this time too, Tata Sons would fetch Rs 11,000 crore from participating in the programme. The money will give Chandrasekaran, also Tata Sons chairman, additional resources to strengthen the balance sheet and to make growth investments. He also said last month that Tata Sons’s growth strategy will be to play on fourth themes – digital, new energy, supply chain and health. He had called the winning bid for Air India the “most important” milestone for the Tata Group.