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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.


Smallcap Stock with History of 6 Buybacks Could Declare the 7th Soon

Aug 24, 2024

With long history of buybacks, Aarti Drugs to review buyback proposal next week. Here's everything you need to know.

Share Buybacks are Back! Here are 5 Stocks with up to 50% Buyback Premium

Aug 9, 2024

These companies are nearing record dates for their buyback.

This Smallcap Stock with History of Regular Bonuses Declares Share Buyback at 16% Premium

May 24, 2024

This small-cap stock greenlit its fourth buyback program. Here's everything you need to know.

Bajaj Auto Share Buyback: To Participate or Not?

Mar 5, 2024

The Rs 40 billion share buyback program opens tomorrow. Here's everything you need to know.

4 Stocks that Could Announce Big Buybacks in 2024

Nov 7, 2023

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

Why L&T Share Price is Rising

Sep 12, 2023

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

BSE Share Buyback: To Participate or Not?

Jul 6, 2023

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

Wipro Share Buyback: To Participate or Not?

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...

Why Infosys, TCS, HCL Tech and Other IT Stocks are Falling

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...

Is the eClerx Services Buyback at 25% Premium Lucrative?

Dec 16, 2022

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

Mayur Uniquoters Buyback: Why Investors are Not Excited Despite the 20% Premium

Aug 13, 2024

Out of the total 5 lakh shares to be tendered in the buyback, only 75,000 are reserved for small shareholders.

Why do Companies Buy Back Shares?

May 29, 2024

Buyback fever sweeps through Dalal Street. Should you participate?

Multibagger Pharma Stock Announces Buyback at 25% Premium

May 3, 2024

This pharma stock greenlit its fourth buyback program in the last five years. Here's everything you need to know.

2 Stocks to Watch Out for Upcoming Buybacks in January 2024

Jan 4, 2024

Looking for buybacks in 2024? Here are two promising stocks poised for upcoming buybacks in January 2024.

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...

5 Consistent Dividend Paying Stocks that Surged Up to 20% Today Thanks to a New Policy Payout

Apr 26, 2023

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

Why Tanla Platforms Share Price is Falling

Mar 24, 2023

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?

Dec 15, 2022

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