Shares Buy back

Q & A ForumCategory: Stocks/SharesShares Buy back
satyasiddem asked 7 years ago
Hi Sreekanth, Shares buy back by IT majors is making news over the last few days. How is this going to build confidence in investors? Also how is it going to benefit  the share holders? What is the difference between dividends and buy-back as in both the cases the organisation is going to shell out its cash reserves. Could you please help us in educating us on this front ? Regards, Satya
1 Answers
Sreekanth Staff answered 7 years ago
Dear Satya, We know that IT industry is facing few challenges especially wrt foreign assignments, VISA, immigration etc due to the new stance taken up by the USA govt. Most of the IT stocks are volatile given the current scenario. So, to instill confidence among the investor community, companies in these of kind of situations may go for 'buy back' of shares, to let investors know that they are confident about the future potential.. Also, Buyback otpions can be seen as a signal that a company believes its shares are undervalued. If buyb-backs are done to maximise Shareholders' value, then it is fine.  Kindly read this article : Buybacks Vs Dividends.
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