Open market buy back

General
1

Hi

How to participate in open market share buyback process ?

Which site is good to follow all about buybacks?

1 Like
2

@Viswanath_Kadiyala : Open market buyback means company will buy own shares from nse/bse through a broker member like you and me do. direct participation of shareholders is not possible and promoters are not allowed to offer .
i follow bse website and corporate information/notices /circulars on it.

3

Hi
@sabkaview how to sell shares then ? should i quote max price they buy while selling?

4

you have to sell in market at prevailing rate only. it is the maximum price at which company will buy and not fixed price as in proportionate style buyback.

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5

Hi

@sabkaview for suppose company offered max price of 100.I have shares with 65 cmp.Now it is trading at 70 on the day i want to sell.So now through zerodha should i put sell option with limit value as 100 in open market ? Please explain.

6

@Viswanath_Kadiyala : you have to put the order as per the applicable circuit breaker limit .

7

@sabkaview what is that limit ? Only buyback value is mentioned in the investorzone.

8

24 September 2018 TO 23 March 2019.

9

Hi

I didnot undstand,could you please elaborate or share an example?

10

You just can not participate in OPEN MARKET BUYBACK .live cases are Td power ,Thyrocare,Radio city ,Dcm shriram ,Mcleod russel .
this type of buyback remain open for 6 months and company can conclude midway on achieving 50% target.the company will buy from stock exchanges through a bse/nse broker like you and me buy and at much lower than maximum price fixed .
only in PROPORTIONATE METHOD FIXED PRICE BUYBACK shareholder can participate and such buybacks are generally remain open for 5-6 days only…recent exmaples are: TCS ,Hcl tech ,navneet publication ,larsen -tourbo ,Mphasis ,Redington etc.

11

Hi,

If buyback price is 256 quoted,then at what price company buys ? if current trading value is 200.for example.

12

@Viswanath_Kadiyala : an amount kept aside for buyback with the condition yes with this condition that company will attempt to buy maximum possible shares in this amount subject to maximum price being 256.the more shares company buys the more reduction in serviceable equity for company ! as per your post if market price is 200 company will buy for 200 through a broker but surely it will not buy the whole quantity at one go but some quantity periodically during the schedule of 6 months at market price of day.
Open market buyback was the only popular method few years back (one or 2 proportionate styled buyback in 10 years or so ) but after introduction of Dividend distribution tax and now Dividend tax on big shareholders ,proportionate style buyback is more popular where 100% money extracted from reserves come in the hand of shareholder.

13

Hi,

Will there be buyback window open and close date for openmarket buyback also ?

14

In open market buyback,you have to trade at exchange rate. So when & what amount( offer rate) company pay to shareholder.

15

If u got the answer than reply me…
My question is so simple but noone is able to answer clearly…

Suppose company has decided 200 Rs/- open market buyback price and my current stock price is 150 Rs/-

Now what should i do to sell it at 200 Rs/- ??? Can i sell at 180 ,190 ,200 Rs /- , If yes thn how???
If NO thn what is the meaning of buyback for normal investors like us ???

16

In open market buyback, the company actively buys shares from the market at current market price. This works differently from the Tender offer buyback, where you can tender the shares at price set by the company.

200 is the maximum price it can buy shares from the market at, so it will try to buy shares below that price. If the CMP of the company goes above 200, the company won’t be able to buy the shares.

Also, you cannot directly sell the shares at that price. You can place the order, but if market price doesn’t go to that point, the order will not be executed.