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Advantages of Buy Back

by Jitu Suthar

Advantages of Buy Back

profit risk loss

Advantages of Buy Back:

  1. It is an alternative mode of reduction in capital without requiring approval of the Court/CLB(NCLT),
  2. Its useful to improve the earnings per share;
  3. It helps to improve return on capital, return on net worth and to enhance the long-term shareholders value;
  4. It helps to provide an additional exit route to shareholders when shares are undervalued or thinly traded;
  5. Its useful to enhance consolidation of stake in the company;
  6. Its also useful to prevent unwelcome takeover bids;
  7. It helps to return surplus cash to shareholders;
  8. Buy Back supports to achieve optimum capital structure;
  9. It helps to support share price during periods of sluggish market condition;
  10. It helps to serve the equity more efficiently.

EPS gets improved as can be been with the below mentioned eg.

ParticularsPre Buy – BackPost Buy – Back
Profit100100
Number of Shares105
EPS1020

Advantages of Buy Back

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