Share Buyback, also known as share repurchase, is a corporate action where a company buys back its own shares from the existing shareholders, usually at a price higher than the market rate. This process reduces the number of outstanding shares in the market, thereby increasing the ownership percentage of remaining shareholders and potentially enhancing the company’s earnings per share (EPS).

Companies generally initiate a buyback to utilize surplus cash, improve valuation metrics, or signal confidence in their business performance. By reducing the share supply, buybacks can help boost investor confidence and stabilize stock prices, especially during volatile market phases. However, buybacks are subject to regulatory guidelines under the SEBI (Buy-back of Securities) Regulations, 2018, ensuring transparency and protecting investor interests.

There are two common methods of share repurchase — the tender offer route and the open market route. In the tender offer, shareholders are invited to sell their shares at a predetermined price within a fixed period. In contrast, the open market route allows companies to repurchase shares through stock exchanges over time, as per prevailing market prices. The choice of route depends on the company’s objective, liquidity, and market conditions.

From an investor’s perspective, a buyback may offer a short-term opportunity to gain from the premium offered over the market price. However, it’s essential to evaluate the company’s financial health, past performance, and intent behind the buyback. Frequent buybacks without strong fundamentals may not always indicate long-term value creation.

In summary, a share buyback is a strategic corporate tool that can enhance shareholder value, optimize capital structure, and signal management’s confidence — when executed responsibly within SEBI’s regulatory framework.