TCS buyback 2023: Should you tender your shares as record date falls next week?
- TCS buyback record date has been fixed on 25th November 2023 i.e. on Saturday next week
TCS buyback 2023: Date for finalising list of eligible shareholders of Tata Consultancy Services (TCS) for buyback of shares has been fixed on 25th November 2023. The Indian IT major has informed Indian stock market bourses that it has fixed 25th November 2023 as TCS buyback record date. The IT giant also informed that TCS buyback record date has been fixed on ex-date basis, which means TCS shares would trade ex-buyback on 24th November 2023 i.e. on Friday next week. So, a TCS shareholder buying TCS shares till 24th November 2023 and holding it on 25th November 2023 will be eligible to tender TCS shares in this ₹17,000 crore buyback offer by the Tata group company.
According to stock market experts, IT companies are expected to report sluggish numbers in next few quarters due to economic challenges in the US and European countries. As TCS gets good amount of its business from the US and European countries, it is expected to report weak numbers in upcoming few quarters. So, short term investors have a good opportunity to tender TCS shares in this buyback offer, which has been made available at a price of ₹4,150 per share levels.
TCS buyback: Why you should tender your shares?
Advising short term investors to 'tender' shares in upcoming TCS buyback offer, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "TCS gets good amount of its business from the US and European countries. After Moody's downgraded US credit rating from stable to negative, the US economy has come under the challenge once again. Recently announced US inflation data, weakness in the US dollar, jobless claim data, etc. signals gloomy picture of the developed nations. Hence, Indian IT companies including TCS is expected to report sluggish numbers in upcoming quarters."
Avinash Gorakshkar went on to add that a company declares buyback of shares in two cases — if it is expecting weakness in its company shares or it is expecting strong upside in near term. In case of TCS buyback, there dones't seem any trigger that may fuel TCS share price. Hence, this buyback of shares looks to squeeze probability of retail sell off in near term.
Prashanth Tapse, senior VP — Research at MEhta Equities said, "Short term trades can buy TCS before record date (25th Nov 2023) and use the opportunity to generate decent returns based on assumed entitlement ratio. Based on buyback rate ₹4,150 short term investors can generate ~18% ROI based on today’s ₹3519. In addition, investors would also take benefits of tax as the income generated from this buyback of shares is tax exempted. We advise investors to buy 48 shares ( ₹200000/4150) to get maximum entitlement under ₹2,00,000 retail category."
Speaking on TCS buyback offer, Sonam Srivastava, Founder & Fund Manager at Wright Research said, "The company's consistent performance, indicated by an 8.7% YoY rise in net profit, suggests a stable outlook. However, the stock has experienced a slight decline in value recently. If you're considering short-term gains, tendering your shares could be beneficial due to the premium buyback price. For long-term investors, it's essential to weigh this against the potential future growth of the company and the IT sector. The buyback reflects confidence from the management, which might bode well for the company's future."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
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