Tata Consultancy Services (TCS) has officially announced the record date for finalizing the list of eligible shareholders for its buyback of shares, set for November 25, 2023. The Indian IT giant revealed that the record date is fixed on an ex-date basis, implying that TCS shares will trade ex-buyback on November 24, 2023, the Friday preceding the record date. Shareholders purchasing TCS shares until November 24 and holding them on November 25 will be eligible to participate in the ₹17,000 crore buyback offer.
Experts in the stock market suggest that IT companies may face challenges in the next few quarters due to economic uncertainties in the US and European countries. Given TCS’s significant business exposure to the US and Europe, it is anticipated to report weaker numbers in the upcoming quarters. Short-term investors are advised to consider tendering their TCS shares in this buyback offer, priced at ₹4,150 per share.
Avinash Gorakshkar, Head of Research at Profitmart Securities, emphasizes the economic challenges in the US and Europe as a reason for short-term investors to tender their shares. He notes that TCS’s buyback indicates a lack of triggers that could drive TCS share prices higher in the near term, reducing the probability of retail sell-offs.
Prashanth Tapse, Senior VP – Research at Mehta Equities, recommends short-term trades to buy TCS shares before the record date (November 25, 2023) to capitalize on potential returns based on the assumed entitlement ratio. He suggests buying 48 shares (₹200,000/₹4,150) to maximize entitlement under the ₹2,00,000 retail category and highlights the tax benefits of the buyback income being tax-exempt.
Sonam Srivastava, Founder & Fund Manager at Wright Research, offers insights into TCS’s consistent performance, indicating a stable outlook with an 8.7% YoY rise in net profit. For those considering short-term gains, tendering shares could be advantageous due to the premium buyback price. However, long-term investors are advised to assess this against the potential future growth of the company and the IT sector.
As the TCS buyback draws near, shareholders are urged to carefully evaluate their investment strategy and consider the various factors at play.
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