MUMBAI: India’s largest software services firm Tata Consultancy Services (TCS) on Thursday announced that it will consider a buyback on February 20.
The move comes at a time when investors have been calling upon IT companies sitting on huge cash piles to return excess cash to shareholders through a buyback or through a bonus issue. US-headquartered Cognizant Technology had announced earlier this month that it will returning $3.4 billion over the next two years to its investors through buybacks and dividends.
“The board of directors will consider a proposal for buyback of equity shares of the company at its meeting to be held on February 20, 2017,” TCS said in a communique to the exchanges. The company had net cash of Rs 43,100 crore at the end of December 31, 2016. Interestingly, this could also be one of the biggest announcements by outgoing TCS CEO N Chandrasekaran, as he is set to take charge as the Chairman of Tata Sons on February 21. The current CFO Rajesh Gopinathan will be assuming the role of CEO post Chandrasekaran's exit.
IDBI Capital’s Urmil Shah believes that TCS could announce a buyback of around $2 billion, “TCS can do buyback of maximum of Rs 20,900 crore or 25% of networth. We believe that it would be reasonable for TCS to announce share buyback of $2 billion or Rs 13,600 crore, which would be 2.9% of the company’s market capitalisation,” Shah said.
V Balakrishnan, the former chief financial officer of Bengaluru-based IT major Infosys has also been demanding a share buyback by the company in order to reward shareholders.
DH News Service
Will take decision on buyback at an appropriate time: Infosys
The country’s second largest software services company Infosys on Thursday said it “periodically” reviews the capital allocation policy and the management will take a decision on share buyback at an “appropriate time”.
The statement comes at a time when Indian IT companies are under increasing pressure from investors to look at utilising large amount of cash on their books either through share buyback or generous dividend.
“Infosys has a clear, defined capital allocation policy which is periodically reviewed by the Board. We have increased the dividend payout twice in the past three years as a result of this process,” an Infosys spokesperson said in an emailed statement.
“The Board and the management will continue to review the policy and take a decision at an appropriate time,” she added.