TCS shareholders approve Rs 16,000-crore share buyback ahead of Q4 results

Buyback programme saw 99.81% of the total number of valid votes being cast in favour of the proposal

Tata Consultancy Services, the country's largest software exporter, said its shareholders had approved a Rs 16,000-crore share buyback plan.

Passed through a special resolution by the board of directors, the proposal saw 99.81 per cent of the valid votes being in favour, the company said.

The shares in the buyback represent 2.85 per cent of the total paid-up equity share capital, at Rs 2,850 a share.  

The board had approved the proposal in February, to buy back up to 56.1 million shares, for an aggregate not exceeding Rs 16,000 crore.

India’s information technology services companies are looking at returning cash to investors as they struggle to grow business in an uncertain environment. As the traditional IT services business gets slow and automation takes over, clients are increasingly spending on digital and cloud projects. 

At these, the business cycles are shorter and require companies to deploy resources at client locations, instead of offshore sites in India.

In February, prodded by activist investor Elliott Management, Cognizant Technology Solutions, which follows the offshore model like Indian IT service firms, announced it would return as much as $3.4 billion to shareholders, from dividends and share buyback.

This was followed by TCS’ buyback. In March, HCL Technologies said it would buy back Rs 3,500 crore of shares. 

Last week, Infosys, under scrutiny by founder N R Narayana Murthy over alleged governance lapses, said it would return $2 billion to shareholders over the next 12 months.

TCS’ shareholder approval comes ahead of the announcement of its March quarter results on Tuesday. The stock  closed Rs 7 or 0.3 per cent down on Monday, at Rs 2,320.85 on the BSE exchange.

Last week, Infosys forecast lower growth for the year ahead, citing challenges for its traditional business, while struggling to win large deals in its newer offerings of artificial intelligence and cloud.

Strategic Move

• TCS’ shareholder approval comes ahead of the announcement of its March quarter results on Tuesday 
• Last week, Infy, under scrutiny by founder Murthy over alleged governance lapses, said it would return $2 billion to shareholders over the next 12 months