TCS fixes record date for buyback!

TCS has fixed November 28th as the record date for its ₹16,000 cr buyback programme. Accordingly, in case you continue to hold the shares till that date, you will be eligible to participate in the buyback.

• TCS’s board had already approved its proposal to buyback up to 5,33,33,333 equity shares of the company at ₹3,000 per share. This is at a premium of about 13% to the current market price of ₹2,657.

Outlook on TCS business

The company had announced stellar numbers in Q2FY21. Global brokerages find TCS to be relatively better placed to navigate the current challenges and gain market share from smaller IT peers.

• Goldman Sachs had raised the share price target to ₹3,032 against Rs 2,688 earlier, after it had increased its EPS estimates for FY21-23 to 6%. Goldman Sachs noted that the company's earnings were above expectation, “with the dawn of a multi-year technology upgrade cycle.”
• Macquarie has a target price of ₹3,030 on TCS, as it believes TCS is on the cusp of a strong growth cycle, with strong demand drivers for digital transformation. 
• TCS has reported a 6.6% on-quarter rise in net profit to ₹7,475 crore in Q2FY21. TCS’s revenue rose 4.73% on-quarter to Rs 40,135 crore—higher than the estimated Rs 39,133 crore.

INDmoney Analysis

TCS shares have run up by more than 45% since April this year. While tendering the shares during the buyback is a lucrative opportunity (gain of about 13% from CMP), the acceptance ratio is likely to be lower, as the company is buying back just 1.42% equity from a total of 375 crore shares. The remaining shares can be held for the long-term as well, as the outlook on the stock remains positive.