BSE Share Buyback: To Participate or Not?

livemint.com:

Stock buybacks are a rage these days. These strategic moves deliver immediate value to shareholders, making them quite appealing. However, there's another compelling reason to embrace share buybacks.

Companies that engage in stock buybacks often prove to be outstanding investments. When a company repurchases its own stock, it effectively reduces the number of shares available to the public. As a result, existing shareholders see their ownership stake in the company grow, enabling them to claim a larger portion of the company's earnings.

They help boost stock prices and indicate that the company possesses ample resources for repurchases, which are very favourable for investors. In light of the current trend, one noteworthy company that has recently announced a share buyback is BSE (Bombay Stock Exchange). Coming back to the buyback details...the company has announced a buyback of shares through a tender offer.

There are two ways in which companies can execute buybacks - the tender offer route and the open market offer. In a tender offer, the company makes an offer to buy back shares at a particular price. Here, the price is usually fixed at a premium, and investors having shares of the company on record date can part with their shares by filling out respective forms over a given period.

In an open market offer, investors don't get much excited. In the open market offer, everything is routed through the stock exchange, and the price isn't fixed. It can vary.

With that explainer out of the way, here are the key details about BSE's share buyback: 1) The board is yet to fix a record date for it. 2) The company will buy back shares at ₹816 per share. This is around 20% higher than its current market price of ₹680.4.