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TCS Board Meet: What to expect

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India’s largest software exporter previously said that it would pay out up to 100 percent of its free cash flows to shareholders.

TCS Board Meet: What to expect
The board of Tata Consultancy Services (TCS) will meet on Friday to consider a proposal to buy back shares.
India’s largest software exporter previously said that it would pay out up to 100 percent of its free cash flows to shareholders. This was announced by TCS Chief Eceutive Rajesh Gopinathan at a recent media interaction.
Here's what you can expect from the company in today's mega announcement:
Buyback value
The buyback might be to the extent of Rs 10,000 crore, according to various media reports.
Last year, TCS announced a Rs 16,000-crore buyback of up to 56.1 million shares at Rs 2,850 a piece. The buyback, which closed on May 31, returned cash to shareholders at a substantial premium.
Commentary
Following the buyback, the company will also hold an annual general meeting and market experts believe the software exporter will share its outlook on growth and expectations from FY19.
Any comments on order book, digital order book, deal pipeline that the company is looking at, forward looking statement with the acquisition will be important, market experts said.
Shares so far
TCS shares have outperformed the market so far this year, rising over 30 percent year to date. At 11:50 IST, TCS shares were up 0.33 percent at Rs 1,798 per share on the Bombay Stock Exchange.
Brokerages' take
Expect buyback to exceed Rs 10,000 crore at price above Rs 2,050 per share. We see the company’s policy to distribute approximately 100 percent of free cash flow to shareholders would lead to return on equity expansion, a precursor for re-rating - Axis Capital
TCS buyback is another trigger for re-rating, we expect the buyback to be about 12000 to 15000 crore. - Elara Capital
Motilal Oswal Securities, which has a neutral rating on TCS shares, anticipates a buyback in the range of Rs 20,000 crore.
Buyback by rivals
Big IT companies such as Infosys and Wipro had also announced share buyback offers.
Infosys, last year, announced a share buyback of Rs 13,000 crore, wherein it purchased 11.30 crore shares from eligible investors at Rs 1,150 apiece.
Wipro's Rs 11,000 crore share buyback for over 34.37 crore shares was at Rs 320 apiece.
 
Disclaimer: Motilal Oswal is the launch partner of CNBC-TV18.

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