Advantages of Buy Back
Advantages of Buy Back:
- It is an alternative mode of reduction in capital without requiring approval of the Court/CLB(NCLT),
- Its useful to improve the earnings per share;
- It helps to improve return on capital, return on net worth and to enhance the long-term shareholders value;
- It helps to provide an additional exit route to shareholders when shares are undervalued or thinly traded;
- Its useful to enhance consolidation of stake in the company;
- Its also useful to prevent unwelcome takeover bids;
- It helps to return surplus cash to shareholders;
- Buy Back supports to achieve optimum capital structure;
- It helps to support share price during periods of sluggish market condition;
- It helps to serve the equity more efficiently.
EPS gets improved as can be been with the below mentioned eg.
| Particulars | Pre Buy – Back | Post Buy – Back |
| Profit | 100 | 100 |
| Number of Shares | 10 | 5 |
| EPS | 10 | 20 |
Advantages of Buy Back
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