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TCS plans for another share buyback
What’s buzzing:
TCS has announced that its board will consider share buyback proposal while declaring its Q3FY22 financial performance on 12th Jan 2022.
Context:
The company had undertaken share buyback program in 2017 for the first time, worth Rs 16,000 crore, wherein the company bought 7.61 crore shares at Rs 2,100 per share. It has undertaken similar program in 2018 as well as in 2020, where the buyback amount has remained consistent at Rs 16,000 crore. Looking at the historical trend, similar amount can expected this time as well.
Our Perspective:
Acceleration in spending by global enterprises in digital transformation and cloud transformation presents a multi-year growth cycle for Indian IT services companies. We expect TCS to benefit from key spending areas like cloud transformation, customer experience, core modernisation and vendor consolidation. This would translate into robust financial performance over FY21-23 wherein we expect revenue, EBITDA, PAT to grow 16.6%, 20.4%, 23.9%, respectively, as well as robust FCF generation. TCS’ disciplined investment approach and returning 80-100% of FCF generation to shareholders, make its capital allocation policy one of the best in the industry. The cash and investments on the book are at Rs 60500 crore as on Q2FY22.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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