TCS May Follow Infosys With Share Buyback, Says CLSA
TCS Buyback News: Global brokerage CLSA has suggested that Tata Consultancy Services (TCS) may announce a share buyback soon, following in the footsteps of Infosys, which unveiled a billion-dollar buyback plan earlier this week. If confirmed, this would continue the trend of Indian IT majors rewarding shareholders through capital return strategies.
Infosys Sets the Tone With Billion-Dollar Buyback
Infosys announced a massive buyback program worth billions, reflecting confidence in its long-term growth prospects and commitment to shareholder value. Historically, such moves by Infosys have triggered similar announcements from peer IT giants, particularly TCS, which has also regularly undertaken share buybacks.
TCS’s Buyback Track Record
TCS has a consistent history of announcing buybacks every two to three years. The company last conducted a share buyback in 2022 worth ₹18,000 crore at a significant premium. Previous buybacks in 2017, 2018, and 2020 were also among the largest in Indian corporate history, signaling its strong cash reserves and steady cash flow generation.
Sector Trend: IT Giants Rewarding Shareholders
TCS Buyback News: India’s IT sector, dominated by TCS, Infosys, and Wipro, has seen companies prefer buybacks as a way to return surplus cash to investors. This practice not only improves return on equity but also supports stock prices during periods of weak business growth. With slowing demand in the global IT outsourcing market, buybacks are seen as a tool to reassure investors of long-term fundamentals.
What Analysts Expect
CLSA has highlighted that TCS, sitting on large cash reserves, is well-positioned to announce a buyback soon. Analysts also believe that such a move could boost investor sentiment and trigger a short-term rally in the stock. However, much will depend on TCS’s board meeting outcomes and the company’s guidance on revenue growth amid global macroeconomic challenges.
Impact on Investors
If TCS announces a buyback at a premium, retail investors could benefit from both the buyback offer and potential stock appreciation. Long-term investors view these moves as confidence-building measures, while traders often position themselves for short-term listing gains once such announcements are made.
Conclusion
Infosys’s latest buyback has set the stage for TCS, and market watchers are keenly awaiting confirmation from the Tata Group’s IT bellwether. A fresh buyback announcement would not only continue the sectoral trend but also reinforce TCS’s reputation as a steady value creator for shareholders.
