Share Buyback is another corporate action wherein listed companies provide enhanced value to their shareholders by buying back their floated securities in the market. Here before getting on the details of the upcoming buyback list, we will list all the aspects around buyback i.e. How the strategy benefits corporate going for a buyback as well as the investor:
Why companies go for a Buyback?
Repurchase of buyback of shares is a strategy taken on to by India Inc. so as to reduce their outstanding share count in the market. This is also taken on to increase the value of the existing shares by decreasing the number of floated shares in the market. The strategy is also a way to curb or disallow other stakeholders to increase their shareholding in the listed entity.
Share buyback objectives can be:
1. For distributing out extra cash
2. Support the undervaluation of the stock
3. Boosting financial ratio such as the return on assets, EPS as the number of shares are reduced and profitability is maintained at the same level that is hence positive for the stock's value.
4. Managing dilution in the company
5. Changing capital structure
6. Avoid hostile takeovers
7. There can also be an instance when the company buys backs its floated shares to issue them to its own employees
8. The buyback by a company also instills a sense of confidence in the company's investors.
How a Buyback works?
The company with a bullish outlook on its current operations comes up with a buyback that boosts the proportion of earnings that a share is allocated. This will raise the stock price if the same price-to-earnings (P/E) ratio is maintained.
The share repurchase reduces the number of outstanding shares on the market, rendering each worth a greater percentage of the corporation. The stock's earnings per share (EPS) thus increases while the price-to-earnings ratio (P/E) decreases or the stock price increases.
2 Modes of Buyback which companyies' can take to
Tender route: This is when a company's shareholder is provided with an opportunity to tender some or all of the shares by the tender offer route and this has to be done within a set time period at the premium to the current market price.
Open market route: This is when the companies' go for buyback of shares on the open market over an extended time period. This may even involve share repurchase at certain times or at regular intervals.
A company can fund its buyback by taking on debt, with cash on hand, or with its cash flow from operations.
Drawbacks of share buyback as viewed by investors
The investors may also see the opening of a buyback by a company as having no other growth opportunities, so the company goes on to distributes its cash to its investors.
Upcoming Share Buyback 2021 List
|Company Name||Record Date||Issue Open||Issue Close||Buyback Type||BuyBack price (Per Share)||Current Market Price||Issue Size - Shares (Cr)||Issue Size - Amount (Cr)|
|Goldiam International||Rs. 1200|
|Rishiroop||September 9||Tender offer||Rs. 125|
|R Systems||August 27||Sept 20||Oct 1||Tender offer||Rs. 225||Rs. 209.3||0.13||10|
|Shriram Pistons||Aug 12, 2021||Sept 17||Sept 30||Tender offer||Rs. 1020||Rs. 930||0.04||10|
|Kaveri seed||Sept 2||March 1, 20222||Tender||Rs. 850||Rs. 607||10|
|eClerx||Tender offer||Rs. 3200|
|Star Cement||August 25||Tender offer||Rs. 150|
|Balrampur Chini Mills Limited||Aug 17, 2021||Feb 16, 2022||Open Market Through Stock Exchange||410||356.75||10|
|Tanla Platforms Limited||Jul 29, 2021||Jan 28, 2022||Open Market Through Stock Exchange||1260||891.25||10|
|Infosys Limited||Jun 25, 2021||Dec 24, 2021||Open Market Through Stock Exchange||1750||1732.15||10|
|Navneet Education Limited||Jun 07, 2021||Dec 06, 2021||Open Market Through Stock Exchange||100||100.65||10|
Note the list is collated just to provide shareholders in stock market to provide a quick glance on active and upcoming share buybacks that can add their value in a scrip. Further you need to do your own analysis before considering tendering or holding the scrip after the buyback has been announced.