Equity share buyback has picked up momentum with over a dozen companies approving proposals in the past three months. During the last one quarter, 13 companies have announced Rs 30,000 crore buyback offers.
Tata Consultancy Services (TCS), HCL Technologies, Larsen & Toubro (L&T) are amongst the leading companies in the Nifty-50 index, including DCM Shriram, Just Dial, MphasiS, ICRA, Navnath Education and Mcleod Russell, approved buyback proposal.
Of the 13 companies announced the buyback offer, seven companies directly wrote to the investors through tender offer, while the shares were bought by six companies, through stock exchanges.
By the end of the current year, all 38 companies bought equity shares worth Rs 550.00 crore through a buyback offer.
Buyback offer to increase their equity is generally stated by their respective companies. Further, companies will be able to avoid tax deductions and reduce their cash balance in book records. Resultantly, the earnings per share (EPS) automatically goes up. In the same way, the return on equity figure gets a leg up if share-holder equity is minimized while profits remain steady.