Buybacks fail to boost long-term prospects; volatility a dampener

Shares of only a fourth of the firms above their buyback price; promoters tend to benefit the most

With shares of every three out of four companies to have offered buybacks over the past two years trading below their maximum repurchase price, the programme has failed to boost the long-term stock performance of companies.

Buybacks have gained popularity over the last couple of years as the preferred method of returning cash to shareholders in a tax-effective manner, especially after the 10 per cent additional tax on dividend income came into effect from April 2017.  

Since then, there have been 87 buybacks totalling nearly Rs 77,000 crore. The buybacks have happened in 83 companies (some of them have done multiple buybacks).