When a company repurchases its own shares to reduce supply and boost value
Definition: Buyback of shares is when a company repurchases its own stock to boost EPS, reduce supply, and show financial strength.
Buyback of shares, also known as share repurchase, is a corporate action where a company buys back its own outstanding shares from existing shareholders. This reduces the number of shares in circulation, which can increase the value of remaining shares and improve financial ratios such as Earnings Per Share (EPS). Companies may opt for buybacks to return surplus cash, consolidate ownership, or signal that their shares are undervalued.
Buybacks can be executed through open market purchases, tender offers, or book-building processes. It is often seen as a sign of a company’s financial strength and confidence in future performance.
Example: ABC Ltd. announced a buyback of shares at ₹350, 20% above market price, boosting investor confidence and EPS.
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