TCS opportunity

TCS Buyback Acceptance Ratio

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# Australian stock exchange picks India’s TCS to rebuild software after earlier flop

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This 125 mill hit will impact around 750 cr to the bottom line in Q3. Q2 profit is ~12000 cr and so this amount is no big deal. Infact Consider this a short term opportunity and a good way to participate in the buyback.
Personally, see good value to buy, if it comes to ~3425 rs, and will participate in buyback

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It definitely does not look good that, TCS does not take sufficient care to ensure that, such fines and penalties are not imposed on it.
If they are doing nothing wrong, then US Court should not have ordered penalty in the previous case.
As an investor this raises minor concerns about their policy and process and also governance.

Please consider this as a noob question: How does buy back normally affect share prices? Isn’t it a good sign for existing share holders that what they own is valued by the company at a premium, that too a 20% premium from the market value?

Not really. Ideally a company should do buyback when share price is depressed but real life is not so simple😅.
Share price depressed → company should do buyback
Company doing buyback → can have n reasons, primary reason being company has excess cash which is used to reward shareholders, company believes buyback to be better than dividend.

Infact I find TCS to be in overvalued category, flattish revenue since 1 year, industry headwinds and a technology which improves productivity and creates a level playing field for smaller players. A really high pe of 28. Opinions of other would differ.

Also, I want to ask others, I have read many times that buyback is better from tax pov, but I disagree on it. Say a investor bought shares at 3500 and sold at 4100 in buyback. The company tcs would need to pay tax of 20 percent on 4100 (-face value which is negligible anyways) which is 820 rupees!! 820 tax on a gain of 600. Is my understanding incorrect here?

If I see from other way, in dividend 30 percent of what company pays goes in taxes (assuming 30 percent tax rate for majority of shares) while in buyback only 20 percent of it goes to taxes.

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An interesting question asked to Warren Buffett about Coca Cola share buyback at 40 PE.

Though I am not sure that TCS doing a buy back at that price is right or wrong.
But this is their 5th buy back since 2017, it is a really cash rich company, pays handsome dividends, 13% Stock Price CAGR for 10 years along with 3% dividend yield.
The entire IT sector is going through challenging times but then that’s nothing new, every sector goes through turmoil and I feel it is such an amazing company to hold on to.


For buyback on proportionate basis, is it in the proportion of shares tendered or the shares held as of record date?
Thank you

TCS Q4 FY 2024 Earnings Analysis:


TCS Q1 FY 2024-25

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AI projects pipeline:
TCS 1.5 B from 900 M
Accenture - Generative AI new bookings of over $900 million for a total of $2 billion fiscal year to-date
TCS is for AI, they don’t have specific number disclosed Gen AI. Interesting developments going on AI front.

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