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.
Aug 24, 2024
With long history of buybacks, Aarti Drugs to review buyback proposal next week. Here's everything you need to know.
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These companies are nearing record dates for their buyback.
May 24, 2024
This small-cap stock greenlit its fourth buyback program. Here's everything you need to know.
Mar 5, 2024
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Nov 7, 2023
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Sep 12, 2023
L&T Shares jump 4% to hit a one year high today. Here's why.
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
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Dec 16, 2022
Hoping to instill confidence and return value to shareholders, eClerx's management has chosen the buyback route.
Aug 13, 2024
Out of the total 5 lakh shares to be tendered in the buyback, only 75,000 are reserved for small shareholders.
May 29, 2024
Buyback fever sweeps through Dalal Street. Should you participate?
May 3, 2024
This pharma stock greenlit its fourth buyback program in the last five years. Here's everything you need to know.
Jan 4, 2024
Looking for buybacks in 2024? Here are two promising stocks poised for upcoming buybacks in January 2024.
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...
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Mar 24, 2023
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Dec 15, 2022
So far this year, 51 companies have announced buybacks worth Rs 375.2 billion.