TCS' value crosses ₹10 trillion after share price rallies more than 7% ahead of earnings
- Tata Consultancy Services (TCS) is now worth more than ₹10 trillion after the company's share price jumped by more than 7%.
- The rally comes after the company announced that its board of directors will be considering a proposal to buyback equity shares at the earnings meeting this week.
- TCS also said that ₹1,218 will appear as an ‘exceptional item’ on its balance sheets in reference to its ongoing legal dispute with EPIC Systems in an earlier filing.
The Indian IT service behemoth's earnings are just around the corner. At the board meeting this week, among other things, the company’s directors will also consider a proposal about the buyback of equity shares.
Even though TCS has not revealed any buyback details, its share price reached a new 52-week high, hitting ₹2,728.95.
What is a share buyback?
A buyback allows a company to buy back its shares from existing shareholders, usually at a price higher than what is prevailing in the market. It’s a way for companies to invest in themselves.
The last time TCS went for a share buyback programme was in 2018 for a whopping ₹16,000 crore. It bought back equity shares at ₹2,100 a piece and garnered over 7.60 crore shares.
At the time, the company said the mega buyback offer was a part of its long-term capital allocation policy of returning excess cash to shareholders.
In an earlier filing, TCS also revealed that ₹1,218 will appear as an ‘exceptional item’ on its balance sheets in reference to its ongoing legal dispute with EPIC Systems.
It took TCS less than one month to earn another ₹1 lakh crore company
Last month, TCS was the second Indian company to cross the ₹9 lakh crore threshold after Mukesh Ambani’s Reliance Retail. In less than a month, it has now crossed the ₹10 lakh crore marker as well.
This year, the company’s stock has gained 25% so far despite the bloodbath caused by the impact of the coronavirus pandemic and associated lockdowns.
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