The Pricing Behaviour on Buying-back IT Companies’ shares in India

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Yogita Dwivedi, Tanuj Nandan, Peeush Ranjan Agrawal


The paper attempts to examine the reaction of the market on four durations of the announcement of buy-back of shares with the comparative study of TCS and Infosys. On analyzing the share price behaviour of the two companies on India’s Bombay Stock Exchange (BSE), the study found that the Premium offered on Pre-Buy-back mean price of both the companies TCS and Infosys followed a similar path of attracting existing shareholders with premium offered in the range of 15-15.9%. On the close of buy-back offer, two offerors commanded identical price range of discount on offer price on TCS share10.6% and Infosys 10.7%.  The standard deviation of post-buy-back share price of TCS (98.505) is higher than the standard deviation of post-buy-back share price of Infosys (68.858). The study concludes that despite having identical responses for an entire four durations, TCS witnessed larger price fluctuation and higher risk than Infosys. Thus, Infosys devised buy-back offer price more prudently than TCS. The study findings may have important implications for all the market participants. The companies that may be proceeding for buy-back may feel confident by seeking identical responses of buy-back from the shareholders.

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