Hello everyone, Today i want to tell you that what is buyback of shares in a very simple language.As name suggests "BUYBACK" means when some Company wants to buy their shares back from their Shareholders is called BUYBACK.
Q:Why companies do this practice?
Ans:
A:To create trust in shareholders that Company has full conviction about their Business that is why They are buying back their Shares.
B: To increase Promoter Shareholding because they think that there is a lot of value in Company.
C. To stabilize the Market price of share in bad conditions
D. To utilize Company cash by buying their own shares
Q: At which price Companies offer BUYBACK?
ANS: It is very important question, usually companies give BUYBACK offer to their Shareholders at Premium Price, Recent example, Yesterday on 15 06 2018, TCS has announced the BUYBACK offer at 15% premium from Market price
TCS current Market price @ 1830
Buyback offer price @ 2100
So as i mentioned earlier, why TCS is buying their shares @ 15% premium from Market, because:
It has conviction about its business.
It has surplus cash
They want to reward their Shareholders by giving this option to exit at premium.
They want to increase their Shareholding.
Q: What is the impact of BUYBACK on Company?
ANS: Usually Market takes it in Positive way, So it creates trust among in Shareholders, Bankers, Public and even Their Clients.
Q: Should retail investors tender their shares in BUYBACK offer?
ANS: It depends on perception of Shareholders that if they are long term investors or short term.Long term investors Must hold the shares, because it has a value that is why Company is buying back the shares, eg: In 2013 HUL announced the buy back offer @ 600. at that time Market price was @ 490.
Those who are holding the Shares getting reward more than short term benefits, because now a days HUL share price is quoting @ 1600
Hope by explaining in a common language, you will get understand the same very easily.
With best Regards
Mohit jagga
Financial Adviser
9466787277
Q:Why companies do this practice?
Ans:
A:To create trust in shareholders that Company has full conviction about their Business that is why They are buying back their Shares.
B: To increase Promoter Shareholding because they think that there is a lot of value in Company.
C. To stabilize the Market price of share in bad conditions
D. To utilize Company cash by buying their own shares
Q: At which price Companies offer BUYBACK?
ANS: It is very important question, usually companies give BUYBACK offer to their Shareholders at Premium Price, Recent example, Yesterday on 15 06 2018, TCS has announced the BUYBACK offer at 15% premium from Market price
TCS current Market price @ 1830
Buyback offer price @ 2100
So as i mentioned earlier, why TCS is buying their shares @ 15% premium from Market, because:
It has conviction about its business.
It has surplus cash
They want to reward their Shareholders by giving this option to exit at premium.
They want to increase their Shareholding.
Q: What is the impact of BUYBACK on Company?
ANS: Usually Market takes it in Positive way, So it creates trust among in Shareholders, Bankers, Public and even Their Clients.
Q: Should retail investors tender their shares in BUYBACK offer?
ANS: It depends on perception of Shareholders that if they are long term investors or short term.Long term investors Must hold the shares, because it has a value that is why Company is buying back the shares, eg: In 2013 HUL announced the buy back offer @ 600. at that time Market price was @ 490.
Those who are holding the Shares getting reward more than short term benefits, because now a days HUL share price is quoting @ 1600
Hope by explaining in a common language, you will get understand the same very easily.
With best Regards
Mohit jagga
Financial Adviser
9466787277
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