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What is Buyback of Shares?

Time and again you must have come across the term "Buyback of shares".

Buyback of shares, also often referred to as share repurchase, is a process where a company buys back its own shares from investors.

The result of the whole buyback process is that the number of shares outstanding for the company is brought down.

After the company purchases its own shares, it often cancels them or keeps them as treasury shares.

Treasury shares are the shares that may have come from a buyback or may have never been issued to the public in the first place.

Now, that you know what a buyback is, you must be wondering - why does a company opt for a buyback?

A primary reason for companies to opt for buyback is its too much cash on books and low investment. Usually, IT companies are sitting on huge amounts of cash and they reward shareholders by buybacks.

Another reason for conducting a buyback is to improve valuations. When a company buys back shares, it results in reduction of the number of shares outstanding. In result, this improves the earnings per share (EPS) and return on equity.

Another reason is that buybacks are a more tax-effective form for rewarding shareholders rather than dividends.

As a shareholder in cash rich companies, you should not only be wary of expensive buybacks. But if possible, use it to your advantage to rake in some cash.

Before you participate in any buyback, investigate the reason behind the buyback.

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These four stocks have the highest cash balance and going by their buyback history, they could opt for a possible buyback in 2024.

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L&T Shares jump 4% to hit a one year high today. Here's why.

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Leading stock exchange BSE approves share buyback proposal at 20% premium. More details Inside.

Wipro Share Buyback: To Participate or Not?

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The IT major has announced a big share buyback worth Rs 120 billion. Here's all you need to know about it...

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Before Indian IT stocks declare their Q4 earnings, take a look at the probable reasons why they're under pressure and what lies ahead...

Is the eClerx Services Buyback at 25% Premium Lucrative?

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Hoping to instill confidence and return value to shareholders, eClerx's management has chosen the buyback route.

5 Stocks That Could Announce Big Buybacks in 2023

Dec 14, 2022

Looking for rewards in a volatile market? Here is a list of 5 companies that may announce big buybacks as rewards.

Infosys Announces Rs 93 bn Buyback and Interim Dividend. 5 Takeaways from Infosys Q2 Results

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For Infosys, deal wins were the key highlight for Q2 as deal wins were the highest in the last 7 quarters.

5 Stocks that Could Announce Big Buybacks in 2022

Aug 18, 2022

Buybacks could mean an improvement in financial ratios such as earnings per share, return on assets, and return on equity (ROE).

5 Things to know about Bajaj Auto's Rs 25 bn Buyback

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The buyback price is 20% higher than Bajaj Auto's current market price.

TCS Share Buyback: A Short-Term Opportunity for Retail Investors?

Oct 12, 2023

The IT major has announced a mega-buyback worth Rs 170 billion. Here's everything you need to know.

L&T's First Ever Share Buyback: Here's What Investors Can Expect...

Jul 22, 2023

This is the first buyback of shares in the firm's 85-year history. Here's what the street is expecting from the engineering major.

Smallcap Textile Company Sets Record Date for Buyback. Participate or Not?

May 9, 2023

This textile company's share price zooms 20% in five days after announcing share buyback. More details inside...

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Breaking down the reasons why these stocks rallied 20% today and what to watch out for.

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Shares of Tanla Platforms have seen a steep fall in 2023. More downside ahead?

Paytm Buyback and Infosys Buyback - Are they Aligned With Shareholders Interests?

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So far this year, 51 companies have announced buybacks worth Rs 375.2 billion.

IEX Announces Rs 980 Million Share Buyback at Over 35% Premium

Nov 28, 2022

IEX board has announced a share buyback at a hefty premium to the current market price.

Down 60% from its High, this Beaten Down Stock to Consider Share Buyback Next Week

Sep 3, 2022

Buybacks are usually carried out when the management of the company perceives the shares of the company are undervalued in the market.

Cyber Security Stock Zooms 20% Post Buyback Announcement

Jul 18, 2022

The company will announce its Q1 results and the buyback price at its board meeting later this week.

Buyback Alert: 5 Stocks to Keep in Your Watchlist

Jun 14, 2022

These smallcap companies have been buying back their shares in the last five years.