RATIONALE AND

EFFECT OF SHARE
BUYBACK: R SYSTEMS
INTERNATIONAL

By
Pranjal Srivastava

WHAT IS SHARE BUY BACK?

A transaction in which
a firm buys back
shares of its own
stock.
Decreases the shares
outstanding.
Increases EPS and
also the stock price.
Stocks repurchased
are known as
Treasury Stocks.

DIFFERENT KINDS OF STOCK

PURCHASES
Company has
excessive cash so the
same is distributed to
shareholders in terms
of buyback rather
then paying them
dividends.
To reduce dilution
caused by often
generous ESOP.

When the firm realises that its capital

structure is heavily burdened with equity, so
the company reduces the same by buyback.

MAJOR EFFECTS OF STOCK

REPURCHASE

Since the outstanding

shares are reduced :
EPS increases.

P/E ratio decreases

and increase as per
the market scenario.

ADVANTAGES OF BUYBACK
Viewed as a positive
signal by investors.
Stockholders have
option either to accept
the offer or to accept
the dividends,
Eliminates a large
chunk of shares,
underrating prices.
Can optimise the
overall WACC.

DISADVANTAGES OF BUYBACK
Stockholders may prefer
cash dividends over
buyback, because of
regular flow.
Selling stockholders
may not have all the
information about the
company.
Repurchasing at high
prices can be
disadvantageous to
remaining stockholders.

R SYSTEMS INTERNATIONAL
Was founded in 1993, is a specialized IT Services
and Solutions firm.
IT Services span over five major verticals
Telecom and Digital Media, Banking and
Finance, Healthcare, Manufacturing and
Logistics and Government Services.
Currently operates from 13 development centres
spread across Asia Pacific, Europe and North
America.
Quality procedures, delivery and operational
excellence, customer centric approach,
intellectual capital and culture of innovation.

R SYSTEMS BUYBACK SNAPSHOT

R Systems announced
a buyback of its
outstanding shares on
Dec 10, 2014.
Prices of the shares
reached the highest
that of in the history.

R SYSTEMS BUYBACK SNAPSHOT

Total amount allotted
for BuyBack Rs. 600
lacs
Amount utilized till
date for buy-back Rs
12, 255, 892
Max. no. of. Shares
proposed for Buy-back
95, 00, 000
Shares purchased till
date 133, 977

THANK
YOU !!