3806 Investors following Mastek. Share this News with them.
0
Like this story, share it with millions of investors on M3
Is buybacks in laggards triggering a spurt in mkt prices?
There have been a lot of buybacks announced in the recent past. They have been indicating the trend, that particular stocks that were laggards in the market, in terms of stock performance, the management has come in and given a very high ceiling price to these stocks, leading to a spurt in their stock prices, reports CNBC-TV18.
There have been a lot of buybacks announced in the recent past. They have been indicating the trend, that particular stocks that were laggards in the market, in terms of stock performance, the management has come in and given a very high ceiling price to these stocks, leading to a spurt in their stock prices, reports CNBC-TV18.
The trend is that buybacks are seen as a valuation game, whether the buybacks happen or do not happen.They just make an announcement at a price that is at a premium.
It has been seen in the case of Mastek, it had a buyback at 134% premium. It had earlier announced a buyback at 58% premium.
Companies sitting on cash, send out a signal of outperformance or that the company is turning around and that is why they are ready to offer a premium at buyback prices.
Natco Pharma offered a buyback at 62%, MRO-TEK at 37% and Indiabulls Financial at a sufficiently high premium of 27%. That is as far as the buyback concern goes.
Analysis shows that whenever a company does announce a buyback, the stock price automatically triggers and the trigger is very fast. But the most important point is whether you consider short-term or long-term, the performance beats market performance, irrespective of whether you take 3,6, or a 12-month period, said analysts.
So, it is not only the stock price that improves, but effects are seen in the company's performance also and that is called a signal of turnaround.
Analysts added that the equity market is a strange creature and it acts differently under the same circumstances. We are a bull market and have to wait and see whether stock prices of companies announcing buyback offshoot the market or not.
The trend is that buybacks are seen as a valuation game, whether the buybacks happen or do not happen.
