TCS to Coal India: How you can make handsome profits from share buybacks

Before participating, consider company's long-term prospects, premium offered and acceptance ratio

Since the beginning of April 2016, 69 companies have proposed or undertaken buybacks of shares worth Rs 58,592 crore (see table). Currently Engineers India has announced one worth Rs 658.8 crore. Information technology (IT) companies such as Tata Consultancy Services (TCS), Wipro and HCL Technologies have been at the forefront. In Union Budget 2016, the government changed the norm for taxation of dividend. Since then,  buybacks have become the preferred route through which companies try to reward their shareholders. Investors need to learn how to decide whether to participate in a buyback or abstain. 

The basics: Buyback is one way