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TCS’ Rs 18,000-crore buyback oversubscribed 7.52 times

The Rs 18,000-crore share buyback programme of Tata Consultancy Services (TCS) was subscribed over 7.52 times.

According to data provided by stock exchanges, 30.11 crore shares were tendered against the offer size of 4 crore shares.

Tata Sons is likely to get around Rs 12,960 crore from the buyback as it holds 72.19 per cent stake in TCS. TCS will extinguish 1.08 per cent of its equity under the buyback programme.

The buyback is being done at Rs 4,500 per share, a 21 per cent premium to TCS’ last close.

Shares of the leading Indian tech company on the BSE closed at Rs 3,708.25, rising more than 0.2 per cent over the previous day’s close.

“The estimated acceptance ratio is 12 per cent, which indicates that if you request 100 buyback shares, the corporation will consider around 12 shares for repurchase at the $4,500 buyback price,” said Anuj Gaur, director of financial market training and education body IBBM.

Explained

Parent Tata Sons to get around Rs 12,960 crore

Tata Sons is likely to get around Rs 12,960 crore from the buyback as it holds 72.19 per cent stake in TCS, which will extinguish 1.08 per cent of its equity under the buyback programme. The buyback is being done at Rs 4,500 per share, a 21 per cent premium to the last close of the TCS stock.

Earlier, companies used to focus more on dividends than buybacks, but the government has started charging a 30 per cent tax according to the slab on dividends. Hence, companies have started giving benefits to their investors through buyback offers.

Taxation on buyback profit is lower than dividend taxation.

In 2020, TCS made a Rs 16,000-crore buyback where the acceptance ratio was 100 per cent for retail and 10 per cent for non-retail investors.




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