After a bright start this morning, the Tata Consultancy Services stock pared a significant portion of its gains, with investors turning slightly cautious at higher levels.
The stock rallied to Rs 2477.50 in a flash this morning, gaining more than 2.5% in the process, following an announcement from the company that its board of directors will meet on 20 February 2017 to consider a proposal for buyback of equity shares.
Talks about a buyback have been doing rounds for quite sometime and that explains the stock's retreat after a smart upmove this morning.
There were expectations that the company would pay a hefty dividend and consider a share buyback to distribute its large cash pile. The company's outgoing MD and CEO N Chandrasekaran had said in a recent interview that the board will consider these options. A buyback by TCS is considered positive for the market and the IT sector in particular, as other IT majors too may soon consider buying back their shares.
Tata Consultancy Services is currently trading at Rs 2443, up 1.2% from its previous closing price. The stock, which had touched a record high of Rs 2740 in mid-August 2016, drifted down to Rs 2054.70 by mid-November 2016 before finding its way up again.
Tata Consultancy Services posted consolidated net profit of Rs 6778 crore in the quarter ended December 2016, up 2.9% over the quarter ended September 2016. Revenue was up 1.5% to Rs 29,735 crore in the third quarter. The company's consolidated revenue in constant currency grew 2% in the December 2016 quarter, over the preceding quarter.
The company paid its third interim dividend (Rs 6.50 per equity share of Re 1 each) for financial year 2016-17 in February 2017. It had earlier paid out dividends of Rs 6.50 per share in July 2016 and October 2016.