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Indian IT giant ‘TCS’ announced a buyback proposal of Rs18,000cr on 12th Jan, 2022. We have a positive outlook on the stock and advise mid-long term investors to participate in the upcoming buyback offer which will take place through tender offer route.

* On 12th Jan, 2022 TCS board of directors approved a proposal for a buyback offer of upto 4cr shares for an aggregate amount of upto Rs 18,000cr. The total buyback size is 1.08% of the total paid-up equity share capital at a price of Rs 4,500 which will take place through tender offer.

* The buyback offer price is nearly 17% above the last closing price i.e. Rs 3,860.

* The buyback proposal is yet to be approved by the shareholders and post receiving approvals from shareholders, details related to record date and timelines will be announced.

* As on 7 th Jan, 2022, The promoter group owns 267crs shares in the company, represents 72.2% of the total paid up share capital.

* Out of the total 4cr shares, small retail investors enjoy 15% reservationsin tender offer. i.e. 60lakhs shares.

* Historically, the acceptance ratio in TCS buy back under tender route have remained high. We expect acceptance ratio for small retail investors to be 50% and advise small retail investors to participate in the upcoming buyback offer.

* If an investor buys 44 shares at CMP Rs. 3,860 i.e. Investment of ~Rs.1.7lakhs, investors can expect 18 to 27 shares to be accepted in buyback process out of the 44 tendered shares that could substantially lower the average holding cost.

* CMP: Rs 3,860

* Buyback Price: Rs 4,500

* Total shares : 44 shares

* Total Investment: Rs 1,69,480

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