Tata Consultancy Services Ltd earlier this week announced its Board’s approval to buy back shares worth Rs16,000 crore at Rs2,850 per share. This is a premium to the market price. If you hold shares of TCS, you may want to know more about buybacks and whether to give up your shares or hold on.
What are buybacks?
The concept is simple: it’s when a company uses its own cash to buy shares from the public. It is somewhat the opposite of an initial public offering (IPO). Once the shares are bought back, they get absorbed and cease to exist. In this case, TCS is buying back shares that account for around 2.85% of the total paid-up equity capital of the company.