INDIA's largest software exporter Tata Consultancy Services(TCS), a Tata Group company, announced a $2.18 billion share buyback plan on Wednesday(7).
The country's second-most valuable firm by market size said net profit slumped by 7.1 per cent to $1.02 billion for the July-September quarter compared to the previous corresponding period.
According to the company, the fall in profit is mainly due to the financial fallout from the coronavirus pandemic and a legal case in the US.
The company said it had also set aside $166m under exceptional items for damages for a US litigation.
"The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future," TCS chief executive Rajesh Gopinathan said in a statement.
Analysts said the share buyback was due to the ongoing legal tussle between its parent company Tata Sons and one of their oldest shareholders, The Shapoorji Pallonji Group.
The group has a 18.4 per cent stake in Tata Sons but has indicated it wants to pull out of the salt-to-steel behemoth.
TCS was at the forefront of an IT boom that saw the country become a back office to the world as firms in developed nations subcontracted work, taking advantage of a skilled English-speaking workforce.
TCS earns more than 80 per cent of its revenues from Western markets including Britain, the US and Europe.
But the Covid-19 pandemic has battered demand for the firm's services in the financial and banking sectors.
Shares of TCS closed almost one per cent higher on the Bombay Stock Exchange Sensex Index in Mumbai ahead of the results being released.
Smaller rival Wipro Ltd has also said its board would consider a share buyback at a scheduled meeting on October 13.
