BENGALURU (Reuters) – Tata Consultancy Services
said on Wednesday it would buy back shares worth up to 160 billion rupees ($2.18 billion), and reported a fall in quarterly profit as it set aside 12.18 billion rupees to cover legal fees related to a U.S. lawsuit.
The company also named Samir Seksaria as its chief financial officer, choosing the over two-decade veteran of India’s top software exporter to replace V. Ramakrishnan who will retire in April next year.
TCS said it would buy back up to 53.3 million shares at 3,000 rupees per share, a 9.7% premium to its stock’s closing price on Wednesday.
“The timing of the buyback has been partly triggered due to the ongoing feud between Tata and the Mistry group (Shapoorji Pallonji group), with the Mistry group looking to exit its Tata Sons holdings,” said Jyoti Roy, an analyst at Angel Broking.
The Shapoorji Pallonji group, which has an 18% stake in TCS parent Tata Sons, recently said “a separation from the Tata Group is necessary”.
A surge in TCS shares on Monday after it disclosed it would consider a buyback helped its market value cross 10 trillion rupees, making it the second Indian firm to achieve the milestone after Mukesh Ambani’s Reliance Industries
Smaller rival Wipro Ltd
has also said its board would consider a share buyback at a scheduled meeting on Oct. 13.
Revenue at TCS’ banking, financial services and insurance unit rose 4.6% to 161.38 billion rupees in the three months ended September. Total revenue rose 3% to 401.35 billion rupees.
Consolidated net profit fell to 74.75 billion rupees, from 80.42 billion rupees a year earlier, missing analysts’ estimates of 78.05 billion rupees, according to Refinitiv data.
($1 = 73.2437 Indian rupees)
(Reporting by Philip George in Bengaluru; Editing by Arun Koyyur and Aditya Soni)
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