The shares of Tata Consultancy Services rallied over 5 per cent to touch Rs 2,678.80 on the BSE in the morning trade on Monday after the IT company said that its board will consider a proposal for buyback of equity shares on Wednesday, October 7, 2020.
The stock of TCS surpassed its previous high of Rs 2,554 that was it touched on September 22.
TCS is the first IT company to go for a buyback of its shares in this fiscal. In March 2020, the company had cash reserves of Rs 73,993 crore.
In a filing to the exchange, TCS Limited Company Secretary Rajendra Moholkar said, “Pursuant to Regulation 29(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform you that the Board of Directors will consider a proposal for buyback of equity shares of the Company, at its meeting to be held on October 7, 2020.”
In another filing, the company said that it would provide Rs 1,218 crore as an exceptional item in the upcoming earnings in relation to the EPIC Systems Corporation case TCS. The case pertains to allegations of intellectual property theft against TCS that is still underway. TCS, however, has made the provision following a warning by the SEBI in March.
The warning letter was sent to TCS by SEBI for not making adequate disclosures four years ago in relation to a jury verdict against it in the EPIC case.
In 2018, the TCS went for Rs 16,000 crore share buyback. The buyback at Rs 2,100 equity share each had entailed up to 7.61 crore shares.
“The provision in the books for legal claim is being made as a matter of prudence,” the company said in its filing.
TCS share on BSE opened with a gain at Rs 2610 on Monday. The stock of the IT company last week closed at 2,522.75.
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