TIME TO AMP UP SCRUTINY ON CORPORATE BUYBACKS

BUYBACK of shares by corporate India has picked up steam since 2022. Last year, 58 listed companies bought back shares worth almost ₹50,000 cr. So far this year, 34 companies have announced share buybacks worth ₹28,000 cr. Recently, L&T announced a buyback of shares worth ₹10,000 cr. Wipro completed a ₹12,000 cr exercise in June, while the Infosys buyback in February was worth ₹9,300 cr. Share buybacks in India do not attract the kind of scrutiny that buybacks in the US do. Perhaps it is time for more debate on the merits of buybacks.

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There are many reasons why companies buy back shares increasing promotors' control, averting hostile takeovers, etc., but the most common reason is to boost the share price. Buybacks are considered suitable for investors as they are offered a premium for surrendering their shares. Those who do not surrender their shares gain due to increased prices. In buybacks, already-issued shares are bought back by the company and cancelled. Due to fewer shares remaining in the cart, the share price increases. Buybacks are often criticised because they unfa