May 04, 2021
Change in tax structure prompted India Inc to favour buybacks again in FY21
Share buybacks have made a strong comeback as tax considerations have once again made India Inc favour the route to reward their shareholders.
In 2020-21, India Inc offered to buy back shares worth Rs 39,295 crore (actual amount acquired stood at Rs 34,624 crore) - 97 per cent more than Rs 19,972 crore (actual amount acquired stood at Rs 17,843 crore) proposed in the previous financial
Furthermore, the share of buybacks in the total shareholder reward kitty (dividend + buyback) rose to 21 per cent in FY21 from 8.3 per cent in the preceding financial year, an analysis of data provided by Prime Database shows.
"Buybacks have emerged as a popular option for companies that have excess cash sitting on their balance sheets to reward shareholders who may be looking for an exit while at the same time allowing the company to recapitalise and improve the relative returns for existing shareholders,” said Karan Marwah, Partner and Head – Capital Markets advisory, KPMG in India.