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.
Nov 7, 2023
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Sep 12, 2023
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Jul 6, 2023
Leading stock exchange BSE approves share buyback proposal at 20% premium. More details Inside.
Apr 28, 2023
The IT major has announced a big share buyback worth Rs 120 billion. Here's all you need to know about it...
Apr 12, 2023
Before Indian IT stocks declare their Q4 earnings, take a look at the probable reasons why they're under pressure and what lies ahead...
Dec 16, 2022
Hoping to instill confidence and return value to shareholders, eClerx's management has chosen the buyback route.
Dec 14, 2022
Looking for rewards in a volatile market? Here is a list of 5 companies that may announce big buybacks as rewards.
Oct 13, 2022
For Infosys, deal wins were the key highlight for Q2 as deal wins were the highest in the last 7 quarters.
Aug 18, 2022
Buybacks could mean an improvement in financial ratios such as earnings per share, return on assets, and return on equity (ROE).
Jun 27, 2022
The buyback price is 20% higher than Bajaj Auto's current market price.
Oct 12, 2023
The IT major has announced a mega-buyback worth Rs 170 billion. Here's everything you need to know.
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.
May 9, 2023
This textile company's share price zooms 20% in five days after announcing share buyback. More details inside...
Apr 26, 2023
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Mar 24, 2023
Shares of Tanla Platforms have seen a steep fall in 2023. More downside ahead?
Dec 15, 2022
So far this year, 51 companies have announced buybacks worth Rs 375.2 billion.
Nov 28, 2022
IEX board has announced a share buyback at a hefty premium to the current market price.
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.
Jul 18, 2022
The company will announce its Q1 results and the buyback price at its board meeting later this week.
Jun 14, 2022
These smallcap companies have been buying back their shares in the last five years.