TCS crosses 7L cr in m-cap

​Mumbai: The largest software exporter TCS on Friday announced a Rs 16,000-crore share buyback, second in as many years, as part of its long-term capital allocation policy of returning excess cash to the shareholders.

Within minutes of the announcement, the shares surged 3 per cent in late trade hitting a new life-time high of Rs 1,849 on the BSE, taking its market capitalisation to a record Rs 7.06 lakh crore. The counter closed Rs 1,841.45, up 2.75 per cent in a dull trade. The company is offering to buy back shares at a premium of over 15 per cent at Rs 2,100 a share.

"The capital allocation policy is paramount to the company. We've always believed in rewarding the shareholders. We've steadily increased our pay-out to shareholders and now we are at the upper end of the band of 80 to 100 per cent bad," MD & CEO Rajesh Gopinathan told reporters after the 50th AGM.

The company plans to buy back 7.61 crore shares or 1.99 per cent of the total paid-up equity share capital through the exercise, which follows a similar Rs 16,000-crore programme undertaken last fiscal. At the AGM, shareholders cheered when chairman N Chandrasekaran spoke about the buyback decision.

Chandrasekaran, who used to head TCS, the largest cash contributor to the diversified Tata conglomerate before being becoming the group chairman last February, said TCS expects the buyback process to get over by September.

Gopinathan justified the Rs 2,100 price offering saying the board of the company that is owned over 72 per cent by Tata Sons, made the recommendation based on current market conditions. Stressing that the price is not a "directional call", he said even last year, the price set was at an 18 per cent premium making a few people skeptical, but the turn of events "proved otherwise".