Buyback

A company purchasing its own shares and extinguishing them, which returns cash to shareholders and raises the earnings attributable to each remaining share.

A company earning ₹615 crore that reduces its share count from 50 crore to 47.5 crore lifts earnings per share from ₹12.30 to ₹12.95.

Whether it creates value depends entirely on price. Buying back shares below intrinsic value transfers value from the sellers to the holders; buying above it does the reverse, and most buybacks are announced after a strong run rather than after a fall.

In India buybacks are executed either through a tender offer, where shareholders can participate proportionally, or on the open market. The tax treatment has changed more than once, so the effective return to a shareholder is not the same as the headline amount.

Judge a buyback by the price paid, not by the size.