In a significant development, Tata Consultancy Services (TCS), India’s foremost IT services provider, has announced its intention to discuss a potential TCS Share Buyback during its upcoming TCS board meeting, scheduled for October 11, 2023. This decision coincides with the approval of the company’s second-quarter financial results.
The announcement, made through a regulatory filing, is in accordance with Regulation 29(1)(b) of the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015. TCS stated, “This is to inform you that the Board of Directors will consider a proposal for a buyback of equity shares of the Company at its meeting on October 11, 2023.”
Notably, the exact size of the buyback has not been disclosed at this time. TCS had previously conducted a buyback of shares valued at Rs 16,000 crore.
This strategic move by TCS comes amid challenging times for the IT industry, as companies grapple with maintaining revenue growth.
In a recent analysis, JP Morgan analysts expressed a cautious outlook for Indian IT firms, predicting a challenging year ahead. “We remain cautious on the sector, as our recent assessments haven’t shown a substantial uptick in demand. We believe the overall situation is less favorable compared to the previous quarter,” commented analysts Ankur Rudra and Bhavik Mehta in a report issued on Wednesday.
Major IT firms, including Infosys, TCS, Wipro, and HCLTech, have all previously warned of clients, primarily based in the United States, reducing IT expenditures, delaying projects, and even canceling contracts. These decisions are attributed to concerns regarding slowing economic growth and the anticipation of prolonged higher interest rates.
The analysts observed, “Investors are bracing for a challenging financial year in 2024 and are looking ahead to a potential recovery in 2025.” This perspective helps explain the recent outperformance of the Nifty IT index in comparison to the broader Nifty 50 over the past three months.
JP Morgan’s projections for large-cap IT companies in the financial year 2025 anticipate modest single-digit earnings growth, in percentage terms, contrasting with market expectations for double-digit growth.
On Friday, TCS shares closed with a gain of 0.87% at Rs 3,620.20 per share on the Bombay Stock Exchange (BSE).
TATA Consultancy Services Limited (TCS) stands as an Indian multinational corporation specializing in information technology (IT) services and consulting. Its central office is situated in Mumbai, Maharashtra, and it is an integral component of the Tata Group. TCS extends its operations across 150 different locations spanning 46 countries. As of July 2022, reports indicated that TCS boasted a global workforce exceeding 600,000 employees. Furthermore, TCS ranks as the second-largest Indian company by market capitalization, holds a prominent position among the most esteemed IT service brands on a global scale, and is the leading Big Tech company based in India.
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