TCS hits record high on buyback plan

TCS jumped 3.98% to Rs 2623.25 after the IT bellwether announced that its board will consider share buyback on 7 October 2020.

In a separate announcement on Sunday (4 October), TCS said that it would be providing Rs 1,218 crore as an exceptional item in its Q2 numbers for fiscal 2021. The company will announce the Q2 results on 7 October 2020.

The exceptional item relates to the compensatory damages TCS has to pay with regard to the intellectual property lawsuit filed by Epic Systems. In October 2014, EPIC had filed a legal claim against TCS in the court of Western District Madison, Wisconsin alleging infringement of Epic's proprietary information.

On August 20, 2020, the US Court of Appeals, 7th Circuit, Chicago, returned a verdict on the appeal filed by TCS, reducing the damages award. The Court held that the punitive damages award of $280 million is constitutionally excessive, vacated the punitive damages award and directed the Trial Court to reassess the punitive damages. The Court upheld the compensatory damages award of $140 million, TCS said in a statement.

In September 2020, TCS filed petition seeking re-hearing on both compensatory and punitive damages. EPIC has also filed petition seeking re-hearing on decision of the Appeals Court invalidating award of punitive damages exceeding the amount of compensatory damages. The provision in the books for legal claim is being made as a matter of prudence, the IT major said.

TCS added that it has the correct and the strongest possible arguments in its favour and the order and reduced damages are not supported by facts presented during the Trial.

Shares of TCS have risen 12.5% in six trading sessions. TCS hit a record high of Rs 2649.98 in intraday trade today.

TCS reported a 12.90% decline in consolidated net profit to Rs 7,049 crore on a 4.06% fall in net sales to Rs 38,322 crore in Q1 June 2020 over Q4 March 2020.

TCS is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for the last fifty years.

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