TCS has recently announced Buyback via Tender Route:
Buyback Size: Rs 18,000cr
Buyback Price: Rs 4,500
Buyback Shares: Rs 4cr
Buyback as a % of Capital: ~1.1%
Last Traded Price: Rs 3,965
Lets dive in on How to make this buyback play successful?
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Buyback Size: Rs 18,000cr
Buyback Price: Rs 4,500
Buyback Shares: Rs 4cr
Buyback as a % of Capital: ~1.1%
Last Traded Price: Rs 3,965
Lets dive in on How to make this buyback play successful?
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Firstly for those who want to understand the Buyback play in detail, can refer our Mega Thread.
Also go through the last year buyback play of TCS.
Also go through the last year buyback play of TCS.
Brief Up:
TCS consistently does the buyback every year in order to reward its shareholders.
TCS buyback size is small (~1.1%), however the retail category in the TCS buyback is also little which makes buyback interesting most of the time.
TCS consistently does the buyback every year in order to reward its shareholders.
TCS buyback size is small (~1.1%), however the retail category in the TCS buyback is also little which makes buyback interesting most of the time.
Acceptance Ratio:
πWith CMP of Rs 3945, Theoretical Acceptance Ratio of TCS buyback turns out to be 19% (31% in last year buyback).
πHowever as not everyone applies in buyback, with 3 difference scenario, following would be the expected application ratio from the buyback.
πWith CMP of Rs 3945, Theoretical Acceptance Ratio of TCS buyback turns out to be 19% (31% in last year buyback).
πHowever as not everyone applies in buyback, with 3 difference scenario, following would be the expected application ratio from the buyback.
With Tender Acceptance to be lower in this buyback, the expected return gets decreased in current buyback with respect to previous buyback.
This will result in increasing risk with lower return in this buyback, considering investing at CMP.
This will result in increasing risk with lower return in this buyback, considering investing at CMP.
Return Expectation:
πWith current price, expected return from TCS buyback would range from -6% (worst case) to +12% (good case).
πWhile this will take more than 2 months the return with respect to opportunity cost will not remain in favour.
(50% chance of good return only)
πWith current price, expected return from TCS buyback would range from -6% (worst case) to +12% (good case).
πWhile this will take more than 2 months the return with respect to opportunity cost will not remain in favour.
(50% chance of good return only)
Is it really an opportunity?
With probability of only 50% to make return higher than market, it seem inappropriate to consider for the buyback at CMP.
Though the share price post buyback turns out to be higher, but in other case, buyback may not turn out well.
With probability of only 50% to make return higher than market, it seem inappropriate to consider for the buyback at CMP.
Though the share price post buyback turns out to be higher, but in other case, buyback may not turn out well.
When to Invest?
As buyback is also a mathematical game, one has to wait for the right time to enter the stock.
π By back calculating these scenario with right investment price, it turns out that any price lower than 3800-3850 would be a good deal to enter for this buyback play
As buyback is also a mathematical game, one has to wait for the right time to enter the stock.
π By back calculating these scenario with right investment price, it turns out that any price lower than 3800-3850 would be a good deal to enter for this buyback play
Should one wait to enter?
TCS has recently announced quarterly results which are at ATH and the share price is at the cusp of ATH, which as per our techno-funda basis is a bullish sign
OI Basis: There are significant call contracts at 4000, which makes 4,000 a good resistance.
TCS has recently announced quarterly results which are at ATH and the share price is at the cusp of ATH, which as per our techno-funda basis is a bullish sign
OI Basis: There are significant call contracts at 4000, which makes 4,000 a good resistance.
How to enter?
π In order to grab the opportunity, one can start allocation 30% of decided investment at CMP, and sequentially invest at every low, to make the avg investment price in the above mentioned range.
We will share our entry time on our Telegram channel.
Stay Tuned.
π In order to grab the opportunity, one can start allocation 30% of decided investment at CMP, and sequentially invest at every low, to make the avg investment price in the above mentioned range.
We will share our entry time on our Telegram channel.
Stay Tuned.
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