TCS shares buyback offer – The board of directors at Tata Consultancy Services (TCS) has approved a share buyback scheme, worth up to Rs 1,000 crore to buy back shares from the company’s shareholders, through an open market transaction to be executed during the period between July 1 and August 31, 2018. While this move might appear as generous, there are also cons attached to it. Here’s what you need to know about TCS share buyback offer… TCS shares buyback offer: What are the pros and cons?
Advantages of Buybacks
A share buyback (also known as a repurchase) is an excellent way for companies to make money. A company that is repurchasing its own stock has many options of what to do with these shares, which it can choose depending on market conditions. It could pay off debt, invest in research & development or acquire other businesses. One of its most lucrative options, however, is a share buyback.
Disadvantages of Buybacks
Share buybacks basically mean that a company is repurchasing its own stock at a premium. When a company engages in share buybacks, it could signal management’s belief that its stock is undervalued and represents an attractive investment opportunity. However, buying back one’s own shares may also be considered to be one of the strongest warning signs of overvaluation.
Who Should Take The Offer?
Well, I’m not an expert on share prices, but if you have a long-term investment plan in mind, I’d advise you to take a look at what TCS is offering. It’s good news for shareholders! If you don’t have any plans to sell your shares anytime soon, it makes sense to take advantage of their generosity and lock in some profits.
Bonus 1 – When Can You Sell Shares?
TCS is offering to repurchase 12.4 crore shares at a price of Rs 1,080 per share. It’s not clear what period that relates to, but let’s assume it’s a one-year period. That means investors who buy now can sell in one year after TCS announces results for that quarter.
Bonus 2 – How Much Do I Get Paid For Each Share?
The TCS share buyback offer is a complex one, with many moving parts. At first glance, it might seem like you’re losing money. If you purchased your TCS stock on or after January 1, 2018 (that is, under the new bonus structure), then you’ll receive Rs75 for every 100 shares sold to TCS. However, if you purchased your TCS stock before January 1 (under the old bonus structure), then here’s how much you get paid per share