IMPACT OF THE SHARE BUYBACK ON KEY FINANCIAL PARAMETERS OF SELECTED S AND P BSE-500 PHARMACEUTICAL COMPANIES

Abstract

The practice of companies purchasing their own shares from existing shareholders is known as share or stock buyback. Companies typically carry out share buybacks either through a tender offer or via the open market, usually offering a price higher than the current market value. From 2012 to 2022, 81% of share buybacks were conducted through tender offers, and 19% through the open market. This study examines the impact of share buybacks on key financial parameters of selected pharmaceutical companies listed in the S and P BSE-500 Index that have undertaken buybacks in the past five years. Out of 34 pharmaceutical companies in the index, only seven executed buybacks during this period. The analysis focuses on parameters such as dividend payments, share prices (across five stages), earnings per share (EPS), return on equity (ROE), share capital, cash balance, and borrowings. The stated motives behind buybacks often include improving EPS and increasing market price.