TCS stock flat despite market rally; share buyback closes on Thursday

Shares of India’s second-most valued stock Tata Consultancy Services Ltd (TCS) were trading flat in a otherwise strong day for stocks. The scrip fell amid the ongoing Rs 17,000 crore share buyback by the IT major, which will conclude on Thursday. Out of the offer size of 4,09,63,855 fully paid-up equity shares, 3,66,58,814 shares or 89 per cent of the buyback has seen tendering by investors, as per NSE.

The buyback was offered at a premium price of Rs 4,150 per share via tender route. Small shareholders, who had a maximum of 57 shares on November 25, can participate in the share buyback. Retail shareholders would get a reservation in the buyback offer to the extent of 15 per cent of the buyback size. The buyback entitlement ratio stands at 17 per cent for small investors.

"Existing shareholders, who are holding TCS’s shares for long term investment in their portfolio worth less than Rs2 lakh as on record date (25-Nov-2023), could use the buyback route and tender their shares (maximum of 57 shares), to get benefits premium buyback price of Rs 4,150. Post the buyback settlement, investors can again buy back the same numbers of shares accepted in buyback at prevailing market price for long term investment and continue to hold unaccepted shares in the portfolio," Sharekhan suggested in a recent note.

Also read: TCS share buyback 2023 to open today. Should you tender shares? Sharekhan answers

Data showed the acceptance ratio had been 100 per cent during the earlier share buybacks by TCS in 2017, 2018 and 2020. The acceptance ratio for share buyback in 2022 was about 24 per cent.

A total of 40 analysts track TCS, out of which 10 have strong 'Buy' calls, eight 'Buy' 14 'Hold' and eight 'Sell' or 'strong Sell' recommendations, as per publicly available data with Trendlyne suggests. The average stock price target for the stock Rs 3,686, which suggests a 5 per cent potential upside. TCS' buyback price stood at Rs 4,150.    

On Monday, the TCS stock was trading at Rs 3,504, down 0.16 per cent.

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