IT company Nucleus software has announced a ₹159 crore buyback offer. Here is a quick round-up of details of the corporate action, what a buyback offer is and how it benefits investors.
Nucleus software’s buyback offer
The company has announced a ₹159 crore buyback offer wherein it will buy 22,67,400 equity shares at a price of ₹700 per share.
As an investor it is important to keep in mind that the company will announce a tender offer where the shareholder has an option to tender all or a portion of their shares within a given time frame.
Financial performance
In the June quarter, the company reported a 15% year-on-year loss in revenue to ₹108 crore. In the same period, the company's net profit too declined by 83% to ₹6 crore.
What is a buyback offer?
A buyback is a corporate action in which the company buybacks or repurchases the outstanding shares from the investors at premium to the current market price.
Simply put, the buyback offer reduces the total outstanding shares of the company. This increases the stock’s earnings per share (EPS) while it reduces the price to earnings ratio.
A buyback usually indicates that the company has sufficient cash reserves and is better prepared to tackle an economic downturn. Also, a buyback offer can be seen as an alternative to the dividend payout by the company.