TCS plans up to $2.2 billion buyback as legal costs hit profit

From Philip George
BENGALURU (Reuters) - Tata Consultancy Services announced on Wednesday that it would buy back shares valued at up to 160 billion rupees ($ 2.18 billion) and reported a decline in quarterly earnings as Rs 12.18 billion was posted It was intended to cover legal costs in connection with a US lawsuit.
The company also appointed Samir Seksaria as chief financial officer and selected the more than two-decade-old veteran of India's leading software exporter to succeed V. Ramakrishnan, who will retire in April next year.
TCS announced it will buy back up to 53.3 million shares at Rs 3,000 per share, a 9.7% premium over its stock's closing price on Wednesday.
"The timing of the buyback was triggered in part because of the ongoing feud between Tata and the Mistry Group (Shapoorji Pallonji Group), with the Mistry Group trying to exit its Tata Sons holdings," said Jyoti Roy, an analyst at Angel Broking .
Shapoorji Pallonji Group, which has an 18% stake in TCS parent company Tata Sons, recently said "a separation from Tata Group is necessary".
A surge in TCS shares on Monday after it was announced that a buyback was being considered helped the market value surpass Rs 10 trillion, making it the second Indian company to break the milestone after Mukesh Ambanis Reliance Industries reached.
Smaller rival Wipro Ltd has also announced that its board of directors would consider buying back shares at a scheduled meeting on October 13th.
TCS banking, financial services and insurance sales increased 4.6% to 161.38 billion rupees in the three months to September. Total sales increased 3% to 401.35 billion rupees.
Consolidated net income decreased from Rs 80.42 billion a year ago to Rs 74.75 billion. According to Refinitiv, analysts' estimates of Rs 78.05 billion were missing.

($ 1 = 73.2437 rupees)

(Reporting by Philip George in Bengaluru; Editing by Arun Koyyur and Aditya Soni)

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