Buyback is when companies buy back their own shares from the market, cancel them, and, ultimately, reduce share capital. With fewer shares in circulation, each shareholder gets both a larger stake in the company and a higher return on future dividends.
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Upcoming Buyback of Shares 2024
Here is the list of upcoming offers for 2024. Stay updated with the latest share opportunities and remain engaged in the primary market.
| Company Name | Record Date | Open | Close | Price |
|---|---|---|---|---|
| Jai Corp | Sept 10, 2024 | TBA | TBA | ₹- |
| Arex Industries | Sept 7, 2024 | TBA | TBA | ₹195 |
| Ladderup Finance | Sept 6, 2024 | TBA | TBA | ₹44 |
| Aarti Drugs | Sept 5, 2024 | TBA | TBA | ₹900 |
| Transport Corporation Of India | Sept 4, 2024 | TBA | TBA | ₹1200 |
| Nucleus Software | Sept 3, 2024 | Sept 9, 2024 | Sept 13, 2024 | ₹1615 |
What is Buyback?
It occurs when a company purchases its own outstanding shares. This reduces the number of shares available on the open market. Companies typically engage in it to increase the value of the remaining shares by decreasing the overall supply. Additionally, It can be used to prevent a major shareholder from gaining a controlling interest in the company.
Key Takeaways
- Investors typically see a share repurchase as a positive indicator that the company has strong cash reserves.
- It is when a company purchases its own shares from the stock market.
- Reducing the number of shares outstanding, It increases earnings per share, often boosting the stock’s market price.
Understanding Buybacks
A Buyback also known as share repurchases, allow companies to invest in their own stock. By reducing the number of shares outstanding, they increase the ownership percentage of existing investors.
if they believe their shares undervalued, aiming to offer better returns to investors. This action increases the earnings per share (EPS) and can lead to a rise in the stock price if the price-to-earnings (P/E) ratio remains constant.
Reducing the number of shares outstanding enhances the value of each share, resulting in a higher EPS and potentially increasing the stock price or decreasing the P/E ratio.
A share repurchase signals to investors that the company has ample cash reserves for emergencies and is less likely to face economic difficulties.
Process of Buyback
Buyback can be conducted in two primary ways:
- Tender Offer: Shareholders receive an offer to tender, or submit, all or some of their shares within a specified timeframe, usually at a premium above the current market price. This premium incentivizes investors to sell their shares rather than keep them.
- Open Market Purchase: The company buys back shares directly from the open market over a set period. This process may involve purchasing shares according to a predetermined schedule or at regular intervals.
Buyback FAQs
A buyback is a company’s purchase of its outstanding stock shares. Buybacks reduce the number of shares available on the open market. Companies usually buy back shares of their stock to increase the value of the remaining shares by reducing the supply of them.
A buyback benefits all shareholders to the extent that when stock is repurchased, shareholders get market value plus a premium from the company. If the stock price rises before the repurchase, those selling their shares in the open market will see a tangible benefit.
The required shares must be in the demat account before the offer ends. Do not sell shares after placing the order. Its orders cannot be modified. However, the client can delete or cancel the existing order and place a new one.
It is generally less risky than investing in research and development for new technology or acquiring a competitor.
Any resulting income on buyback of shares is exempt from tax, in the hands of shareholders under section 10(34A) of the Act.
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