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Tata Motors, TCS, Paytm, and other hot stocks on January 13

<ul><li><keyword id="6358355" type="General" weightage="50" keywordseo="forex" source="Orion">Forex</keyword> traders said sustained foreign fund outflows weighed on investor sentiments and restricted the appreciation bias.</li><li>On Thursday, the <keyword id="6355302" type="General" weightage="20" keywordseo="RUPEE" source="Orion">rupee</keyword> settled 9 paise higher at 82.38 against the US dollar.</li><li>The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.23 per cent to 104.53.</li></ul> The rupee appreciated 19 paise to 82.19 against the US dollar in early trade on Friday on broad dollar weakness and a firm trend in domestic equities. Forex traders said sustained foreign fund outflows weighed on investor sentiments and restricted the appreciation bias. At the interbank foreign exchange, the domestic unit opened at 82.30 against the dollar, then gained further ground to touch 82.19, registering a rise of 19 paise over its previous close. On Thursday, the rupee settled 9 paise higher at 82.38 against the US dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.23 per cent to 104.53. "With China relaxing its COVID restrictions such as mass testing, lockdowns and quarantine requirements, it is widely feared that cases and deaths would shoot up, causing further widespread economic disruptions. This is something we need to keep a close eye on," <keyword id="14979511" type="General" weightage="80" keywordseo="ifa-global-research-academy" source="Orion">IFA Global Research Academy</keyword> said in a research note. Brent crude futures, the global oil benchmark, advanced 0.89 per cent to USD 76.83 per barrel. In the domestic equity market, the 30-share <keyword id="53232" type="General" weightage="80" keywordseo="bse-sensex" source="Orion">BSE Sensex</keyword> was trading 25.7 points or 0.04 per cent higher at 62,596.38. The broader NSE Nifty rose 19.25 points or 0.1 per cent to 18,628.60. <keyword id="6438315" type="General" weightage="80" keywordseo="foreign-institutional-investors" source="Orion">Foreign Institutional Investors</keyword> (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 1,131.67 crore, according to exchange data. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-nifty50-open-in-the-green-paytm-rises-on-buyback-proposal-hcl-tech-declines/articleshow/96101305.cms">Sensex, Nifty50 open in the green – Paytm rises on buyback proposal, HCL Tech declines</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sports/news/football-players-age-faster-than-others-says-a-harvard-study/articleshow/96101209.cms">Football players age faster than others, says a Harvard study</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/the-future-is-connected-80-of-traditional-tv-viewers-want-to-switch-in-a-year-says-finecast-kantar/articleshow/96087259.cms">The future is connected: 80% of traditional TV viewers want to switch in a year says Finecast Kantar</a>

Rupee gains 19 paise to 82.19/$ on dollar weakness and firm equities

<ul><li>Tata Consultancy Services (TCS) is now worth more than ₹10 trillion after the company's share price jumped by more than 7%.</li><li>The rally comes after the company announced that its board of directors will be considering a proposal to buyback equity shares at the earnings meeting this week.</li><li>TCS also said that ₹1,218 will appear as an ‘exceptional item’ on its balance sheets in reference to its ongoing legal dispute with EPIC Systems in an earlier filing.</li></ul>Tata Consultancy Services (TCS) market cap is at a record high with its valuation hitting ₹10.16 trillion after the company's shared rallied by more than 7% today. The Indian IT service behemoth's earnings are just around the corner. At the board meeting this week, among other things, the company’s directors will also consider a proposal about the <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/93BCBE28-2FD3-492A-82AC-C4A758576A6E-072450.pdf">buyback of equity shares.</a> <div type="image" title="TCS share price 1 (1)" msid="78493313" hostid="261" caption="&amp;lt;p&amp;gt;TCS share price over the last one month&amp;lt;/p&amp;gt;"></div> Even though TCS has not revealed any buyback details, its share price reached a new 52-week high, hitting ₹2,728.95. What is a share buyback? A buyback allows a company to buy back its shares from existing shareholders, usually at a price higher than what is prevailing in the market. It’s a way for companies to invest in themselves. The last time TCS went for a share buyback programme was in 2018 for a whopping ₹16,000 crore. It bought back equity shares at ₹2,100 a piece and garnered over 7.60 crore shares. At the time, the company said the mega buyback offer was a part of its long-term capital allocation policy of returning excess cash to shareholders. In an earlier filing, TCS also revealed that ₹1,218 will appear as an ‘exceptional item’ on its balance sheets in reference to its ongoing <a href="https://www.businessinsider.in/business/corporates/news/tcs-420-million-punitive-damages-ruled-excessive-by-us-court-to-be-reassessed-for-a-second-time/articleshow/77670645.cms">legal dispute with EPIC Systems</a>. It took TCS less than one month to earn another ₹1 lakh crore company Last month, TCS was the <a href="https://www.businessinsider.in/stock-market/news/after-reliance-tcs-becomes-second-indian-firm-to-cross-9-lakh-crore-market-valuation/articleshow/78104482.cms">second Indian company to cross the ₹9 lakh crore threshold</a> after Mukesh Ambani’s Reliance Retail. In less than a month, it has now crossed the ₹10 lakh crore marker as well. This year, the company’s stock has gained 25% so far despite the bloodbath caused by the impact of the coronavirus pandemic and associated lockdowns. <div type="image" title="TCS share price 2 (1)" msid="78493386" hostid="261" caption="&amp;lt;p&amp;gt;TCS&amp;#39; share price since January&amp;lt;/p&amp;gt;"></div> SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/indusind-icici-rbl-axis-hdfc-kotak-mahindra-bank-share-price-and-other-stocks-surge-on-loan-moratorium-case/articleshow/78486360.cms">Bank stocks surge after government agrees to waive off interest on loans up to ₹2 crore</a> <a href="https://www.businessinsider.in/tech/news/vijay-shekhar-sharma-fires-the-shots-paytm-launches-its-own-android-mini-app-store-to-take-on-google/articleshow/78484994.cms">Vijay Shekhar Sharma fires shots – Paytm launches its own Android mini-app store to take on Google</a> <a href="https://www.businessinsider.in/defense/news/next-round-of-india-china-corps-commander-talks-scheduled-for-october-12/articleshow/78485609.cms">Next round of India-China Corps Commander talks scheduled for October 12</a>

TCS' value crosses ₹10 trillion after share price rallies more than 7% ahead of earnings

<ul><li>When exercising your ESOP options, you need to pay for the shares at the exercise price. </li><li>There may be an additional tax burden if the <keyword id="173739" type="General" weightage="20" keywordseo="esops" source="Orion">ESOPs</keyword> are provided at a value lower than the fair <keyword id="6463972" type="General" weightage="20" keywordseo="market-value" source="Orion">market value</keyword> at the time of vesting. </li><li>If the company fails to perform well, or lacks successful liquidity events, the potential returns on ESOPs may remain unrealised. </li></ul>When talking about the glitzy world of start-ups, a discussion on employee stock ownership plan (ESOPs), always comes up. In recent news Swiggy announced that it will buy back shares worth $50 million from employees. Also, Paytm granted 1.7 million new ESOPs to employees. A few weeks ago Flipkart announced a $700 million ESOPs payout. However, the world of ESOPs may not all be as rosy as it seems at first glance. ESOPs work in a certain way and there are a lot of factors which need to fall into place before an employee can make a profit out of them. Therefore, one needs to understand that with start-ups coming under a lot of pressure due to an uncertain economic scenario and a funding crunch, have ESOPs lost their charm? “ ESOPs are often offered to outstanding performers to foster a sense of ownership, and nowadays, start-ups use them as a means to attract and retain top talent. However, it is essential to be aware that some companies might also offer ESOPs to compensate for situations when they cannot offer competitive salaries,’ says Anjali Raghuvanshi, Chief People Officer, Randstad India, a HR consulting firm. What this essentially means is that when taking up a job offer, do note if ESOPs are a part of the salary package as this may come at the cost of foregoing some salary. It is important to understand two major risks associated with ESOPs. Let us take a look. <cmsannotation type="cmsannotation" annotationid="You would need to fork out money upfront" comment="subhead" text="You would need to fork out money upfront">You would need to fork out money upfront</cmsannotation> Here is where owning ESOPs can get tricky. “There are two up-front costs you have to bear when you are exercising your ESOP options. The first cost is the amount you pay the company for those ESOPs,” says BM Singh, ESOP Expert &amp; Managing Partner, BMSA, a consulting firm. Suppose an employee is granted 1,000 ESOP options by a company. The exercise price or strike price of each option is ₹100. This means that the employee can purchase the company's shares at ₹100 per share at a future date, regardless of the market price at that time. Now, let's assume that the market price of the company's shares increases to ₹150 when the employee decides to exercise their ESOP options. To exercise the options, the employee needs to pay the exercise price, which is ₹100 per share. The cost to the employee to exercise their ESOP options would be ₹100,000. <cmsannotation type="cmsannotation" annotationid="Additionally, there may be a tax implication" comment="subhead" text="Additionally, there may be a tax implication">Additionally, there may be a tax implication</cmsannotation> The next is the tax implication that arises here. If the ESOPs are granted at a value lower than the fair market value during vesting, there could be an extra tax burden, resulting in potential tax liabilities before fully realising the value of the ESOPs. “ESOPs are taxable in the hands of the employees as perquisite u/s 17(2) of the IT Act. The taxable amount of such perquisite would be the fair market value (FMV) of the shares (computed in accordance with Rule 3(8) of the IT Act) on the date of exercising such option less any amount paid by the employee for such ESOPs,” says Suresh Surana, Founder, RSM India, an audit, tax and consulting firm. In the above example, the employee would need to pay tax on the taxable amount of ₹50,000 at the applicable tax rate. The exact tax amount will depend on the individual's income tax slab rate. <cmsannotation type="cmsannotation" annotationid="A bigger concern" comment="subhead" text="A bigger concern">A bigger concern</cmsannotation> Poor company performance and uncertainty of liquidity events may render ESOPs worthless. “If the company fails to perform well or lacks successful liquidity events, the potential returns on ESOPs may remain unrealised, potentially impacting the value of the effort and time invested over the years, “ says Raghuvanshi. The value of ESOPs is closely tied to the company's performance and growth potential. If the company's value decreases, it can negatively impact the value of your stock options, potentially making it challenging to sell your shares at a profit. Hence, it is important for an employee to evaluate the future prospects and growth of a company before making a decision to exercise the option. When an employee exercises the options, he should have trust in the company's future growth and performance. “The employee should also be aware about the exit possibilities in case of unlisted shares i.e. buyback track record, funding rounds etc,” says Akhil Chandna, Partner, Tax, Grant Thornton Bharat, a professional services firm. When exercising ESOPs, it is thus essential to conduct a thorough assessment of the company's current performance and financial well-being. This evaluation helps the employee make informed decisions about exercising their options. “Any significant changes since joining could impact the decision,” says Raghuvanshi. <cmsannotation type="cmsannotation" annotationid="Risk of ESOPs are higher in an early stage start-up" comment="subhead" text="Risk of ESOPs are higher in an early stage start-up">Risk of ESOPs are higher in an early stage start-up</cmsannotation> If a start-up is bootstrapped or in the idea phase, the risks are higher. In that case ESOPs are merely paper money. As the different rounds happen, the value of the ESOPs and the probability of liquidity increases. “You should see at which stage of the start-up you are entering. At each phase the value of ESOPs is different. So if you are joining a company just on the basis of ESOPs and not getting a reasonable salary and the company is in its early stages, then you should also focus on the cash component,” says Singh. If it has reached the Series A or Series B funding stage, then you can consider the value of ESOPs when joining and can consider it an important part of your salary package.

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Tata Motors, TCS, Paytm, and other hot stocks on January 13

Rounak Jain

Rupee gains 19 paise to 82.19/$ on dollar weakness and firm equities

PTI

TCS' value crosses ₹10 trillion after share price rallies more than 7% ahead of earnings

Prabhjote Gill

Explained: What accepting ESOPs, especially if joining a start-up, might entail

Anagh Pal

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