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The ₹16,000-crore buyback of Tata Consultancy Services, which will end on January 1, 2021, has received an overwhelming response from investors.
The buyback, which began on December 18, has been subscribed 163 per cent.
TCS proposed buying back 5.33 crore shares (1.4 per cent of its capital) at ₹3,000 a share and has received bids for 8.725 crore shares.
Tata Sons, big gainer
As TCS plans 'to return capital to shareholders' through the buyback, its promoter, Tata Sons, will be the major beneficiary as it holds 72.05 per cent stake.
The company had a cash pile in excess of ₹55,000 crore at the end of September 2020.
Record date
The buyback, under the tender offer route, is open to all eligible shareholders of the company holding equity shares either in physical or electronic form, as on the record date of November 28.
Given the wide retail ownership of the stock, analysts expect the acceptance ratio will be less. Over 8.84 lakh small investors hold 3.24 per cent stake or 12.16 crore shares in TCS. LIC holds 3.93 per cent.
TCS' net profit in the quarter ended September 30 rose nearly 5 per cent y-o-y to ₹8,433 crore. The net profit excluded a ₹1,218- crore provision towards legal claims. Including this number, the net profit was ₹7,475 crore, TCS said in a regulatory filing. TCS had registered a net profit of ₹8,042 crore in the September 2019 quarter.
The latest buyback is its third since its listing in 2004, after August 2018 and May 2017.
Wipro: Day 1 response
Meanwhile, Wipro’s ₹9,500-crore buyback opened for subscription on Tuesday and the company received bids for just 0.03 per cent on Day 1.
The IT major plans to buy back up to 23.75 crore shares, representing 4.16 per cent of the total paid-up equity share capital of the company, at a face value of ₹2 each at a price of ₹400 per share.
The buyback closes on January 11, 2021, while the record date to participate in the buyback was December 10, 2020.
Stocks at peak
The stock of Wipro hit a 52-week high of ₹390.40 on the BSE but closed at ₹384.95. Similarly, TCS too after registering its 52-week high at ₹2,951.50, closed flat at ₹2,930.65 on the BSE.