Session 21

 16-03-2026

Today's session focused on share repurchase or stock buyback and its impact on financial structure and shareholder value.

A stock buyback reduces the number of outstanding shares, which can influence both share price and firm value. The discussion on buyback pricing was particularly interesting. If shares are repurchased at a price higher than market value, it may reduce the firm’s overall value, whereas buying at market price may leave the share price largely unchanged.

We also looked at factors that favour share repurchases, such as flexibility, undervaluation, and tax advantages. Compared to dividends, buybacks allow companies to adjust their decisions based on market conditions. If a company believes its stock is undervalued, repurchasing shares can signal confidence to the market.

The case discussion on Infosys raised an important question about whether buybacks reflect strong capital discipline or whether they limit funds available for innovation and long-term growth. This made me think about how companies balance immediate shareholder returns with future investment opportunities.

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