Mumbai: India's top software services exporter Tata Consultancy Services(TCS) will buy back shares worth up to 160 billion rupees ($2.4 billion), it said on Monday, adding to pressure on similarly cash-rich rival Infosys to follow suit.
Separately, TCS named V Ramakrishnan as the company's new chief financial officer.
Former CFO Rajesh Gopinathan was promoted to chief executive in January to fill the vacancy created by Natarajan Chandrasekaran's elevation to chairman of parent Tata Sons after last year's ousting of Cyrus Mistry in a boardroom coup.
The TCS board has approved the buyback of up to 56.1 million shares at 2,850 rupees apiece, the company said in a stock exchange filing, returning cash to shareholders at a substantial premium to Friday's closing price of 2,407.90 rupees.
Its offer is above the record price of 2,839.70 rupees hit in October 2014 and sent TCS shares up 3.9 percent on Monday.
Some former executives at Infosys, meanwhile, have been clamoring for a buyback as friction between the founders of India's second-biggest software services company and its board has spilled into the public domain.
Analysts have largely agreed with those calls, saying that stock repurchases can attract investors at a time when India's $150 billion IT sector faces an uncertain outlook as immigration reforms in the United States cast a shadow over its ability to service clients in its biggest market.
Former Infosys chief financial officer V. Balakrishnan on Monday urged his former company to follow TCS with a buyback.
"If you look at the IT services industry, the growth is slowing down and they are all transforming from growth stocks to value stocks," Balakrishnan told Reuters.
"When you become a value stock it makes lot of sense to return money to shareholders, and a buyback is the most tax-efficient way."