TCS share buyback in progress, should you sell shares?

India's largest IT services firm Tata Consultancy Services (TCS) has initiated buyback of shares on December 18. The Rs 16,000-crore share buyback programme will close on January 1, 2021.

Last month, TCS shareholders had approved a proposal to buy back up to 5,33,33,333 equity shares of the company at Rs 3,000 per scrip for an aggregate amount not exceeding Rs 16,000 crore.

Buyback price of Rs 3,000 was at a 5.71% premium to the closing price of Rs 2,837.90 on December 17 (Thursday).

On whether one should tender their shares in the share buyback offer depend on his investment horizon, said analysts.

TCS share hits all-time high, here's why

"Whether an investor should tender or not depends on the investment horizon. We would recommend investors with a long term investment horizon of greater than one year to hold on to the stock given strong demand growth expected for IT services due to increased adoption of digital technologies," says Jyoti Roy - DVP- Equity Strategist, Angel Broking.

For investors in TCS share with a short term horizon, Roy recommends to go for the offer.

She says, "Investors with a short term investment horizon in TCS shares can tender their share in the buyback given the fact that there would be no tax liability in the investor tendering their shares in the buyback."

On Friday when the firm started its buyback offer, the shares of Indian IT services company hit all-time high of Rs 2,898 on BSE. TCS share touched an intraday high as well as an all-time high of Rs 2,898, rising 2.12% against the last closing of Rs 2,837.90. Market capitalisation of the IT major stood at Rs 10.84 lakh crore on BSE.