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<\/p>\nCompanies spent less money buying back their shares from the public last year than at any time since 2015.<\/p>\n
<\/p>\n
They announced buybacks of up to Rs 14,341 crore, show numbers from primary market tracker Prime Database.<\/p>\n
The total amount spent was Rs 13,597 crore. Both the amounts are lower than what was offered (Rs 39,564 crore) and spent (Rs 36,517 crore) in 2020.<\/p>\n
The 2020 amounts were also lower than what companies spent in the year before that (see chart).<\/p>\n
A buyback is a way for a company to return capital to shareholders, and firms usually buy back shares at a price higher than the market price of the stock.<\/p>\n
A buyback is often a signal that the company feels its shares are undervalued.<\/p>\n
The stock market has traded at record levels in an uninterrupted bull run after an initial crash in early 2020, when the Covid-19 pandemic began.<\/p>\n
Central banks globally cut interest rates to limit the economic damage from the pandemic fallout.<\/p>\n
They injected large amounts of cash into the global financial system, some of which flowed into the stock markets, pushing up prices and valuations.<\/p>\n
Foreign portfolio investors pumped in Rs 1.7 trillion into Indian equities in 2020.<\/p>\n
They invested another Rs 25,752 crore in 2021.<\/p>\n
The S&P BSE Sensex, considered a broad indicator of how the market is doing, hit an all-time high of 62245.43 in October 2021.<\/p>\n
It has more than doubled from being under 30,000 in March 2020.<\/p>\n
“Pursuant to regulation 29(1 )(b) of the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform you that the Board of Directors will consider a proposal for buyback of equity shares of the Company, at its meeting to be held on January 12, 2022,” it said.<\/p>\n
It had announced a Rs 16,000-crore buyback in 2018.<\/p>\n
There was another one announced in 2020 for another Rs 16,000 crore.<\/p>\n
Details for the latest one have not been announced yet, but the company had cash and cash equivalents of Rs 51,950 crore as of September.<\/p>\n
It had previously announced some of the biggest buybacks seen in recent years (see chart).<\/p>\n
Technology companies have dominated the buyback space.<\/p>\n
Infosys and Wipro had also made large announcements previously.<\/p>\n
The trio have bought back more than Rs 80,000 crore since 2017.<\/p>\n
Others, who had made large buyback announcements previously, include public sector majors NMDC, Indian Oil Corporation and ONGC.<\/p>\n
The average buyback amounts have fallen for listed firms, shows Prime data analysis.<\/p>\n
The average offer was worth Rs 341.5 crore.<\/p>\n
This is 52.5 per cent lower than Rs 719 crore in 2020.<\/p>\n
The highest average amount in recent years was Rs 1,114.9 crore in 2017.<\/p>\n
Historical data shows that earlier, many firms only announced buybacks without necessarily going through with them in a time-bound manner.<\/p>\n
Only 55.4 per cent of the buyback amounts announced in 1999 were carried out during the year.<\/p>\n
The smallest proportion was in 2006, when there were five offers that only bought up 6.4 per cent of the offer amount announced during the year.<\/p>\n
Tighter regulations since have increased the amounts mopped up.<\/p>\n
Only 44.4 per cent of the offered amounts were spent on acquiring shares from investors in the ten years ending 2010.<\/p>\n
This has risen to 97.3 per cent in the last five years.<\/p>\n