TCS to buy back shares worth Rs16,000 crore

Tata Consultancy Services (TCS), the country's top IT services provider, today announced plans to buy back shares worth up to Rs16,000 crore (about $2.4 billion), liquidating part of its Rs43,169 crore cash pile.

The TCS board has approved the buyback of up to 56.1 million shares at Rs2,850 apiece, the company said in a stock exchange filing.

"TCS board of directors has approved a proposal to buy back up to 5.61 crore equity shares of the company for an aggregate amount not exceeding Rs16,000 crore," the company stated in the filing.

The board meeting is the last that newly-elected group chairman N Chandrasekaran is presiding over before he takes over as chairman of parent Tata Sons Ltd, tomorrow.

The offer is at a substantial premium to Friday's closing share price of Rs2,407.00.

The decision comes at a time when TCS is facing the prospect of losing revenue from its US business under President Ronald Trump's `America First' policy, as US accounts for a major share of the company's revenue.

The share buyback, when completed, will be India's biggest, surpassing Reliance Industries' 2012 share repurchase of Rs10,400 crore.

TCS shares rallied 4.08 per cent to close at Rs2,506.50 on the BSE, the highest closing price in five months.

The announcement will put pressure on smaller rival Infosys to part with some of its cash pile at a time when some former senior executives have opposed the company's governance norms and have demanded a share buyback.

TCS, part of the salt-to-software Tata Group, had total cash and investments of Rs43169 crore as if 31 December, while Infosys had cash of Rs35697 core.