Fundamentals & valuation
What is Share buyback?
Also called: Buyback
Hinglish mein padhein: Share buyback kya hota hai?
A buyback is when a company repurchases its own shares from shareholders, usually at a premium, reducing the number of shares outstanding.
Fewer shares means each remaining share owns a bigger slice of profits. Buybacks can be through a tender offer or open-market purchases.
Tax rules on buybacks changed from October 2024: the proceeds are now taxed in the shareholder's hands as dividend income.
Related terms
- DividendA dividend is a share of profit paid to shareholders in cash. Dividend yield is the yearly dividend divided by the share price.
- Free cash flowFree cash flow is operating cash flow minus capital expenditure — the cash a business generates after investing to maintain and grow.
- EPS (Earnings per share)EPS is a company's net profit divided by its number of shares — the profit earned for each share you own.