What were the top buy back deals of the year 2022?

Buybacks had become a big story in 2022. Some of the biggest IT companies did a repeat of their of their recent share buybacks. However, year 2022 was not just about the IT related buybacks. There were other companies from the old economy brick and mortar industries too. Now, there is an interesting background to buybacks that explains why they have taken off. When dividends were made fully taxable in the hands of the recipient, it made a lot more sense for companies to distribute profits in the form of buybacks than through dividend payments. However, what really helped buybacks to take off is the tax amendment in 2018 that really gave a boost to the buybacks.

The government realized that the buybacks were being taxed as long term capital gains which gave an arbitrage. Hence, the government decided to tax buybacks through dividend distribution tax at 20%. However, this ended up boosting buybacks as the dividend tax was paid by the company and effectively even continuing shareholders ended up footing part of the bill. This gave a boost to people to opt for buybacks. This still continues and that is why buybacks continue to be popular. We look at the ten biggest buybacks in the year 2022 done by major Indian companies.

10 major buybacks done by Indian companies in 2022

Here is a quick summary of the 10 biggest buybacks of the current year.

1. Tata Consultancy Services (TCS), India’s largest IT company and the second most valuable Indian company, did a buyback of shares worth Rs18,000 crore. The tender offer to the shareholders was made between 23rd February 2022 and 09th March 2022 and the response was quite robust. A total of 4 crore shares were bought back by the company at a price of Rs4,500 per share. TCS stock has a face value of Rs1.
    

2. Associated Cement Companies (ACC), which has just been taken over by the Adani group as part of cement consolidation, also did the second largest buyback of 2022. It bought back shares worth Rs11,259 crore through the open market. The buyback was in operation between 28th August and 09th September 2022. The buyback price had been set at Rs2,300 per share.
    

3. Infosys Ltd cannot be too far behind if TCS is doing a buyback. Like TCS, even Infosys is a cash rich company with big reserves to bankroll a buyback. The Rs9,300 crore buyback by Infosys commenced on 07th December is expected to continue all the way to 06th June 2023. Infosys will buy back a total of 5.02 crore at a price of Rs1,850 per share. The open market purchase of shares is being done through its free reserves.
    

4. Bajaj Auto Ltd (BAJAJ-AUTO) did a buyback of Rs2,500 crores in the open market between 04 July 2022 and 10th October 2022 this year. The shares of Bajaj Auto were bought back at an average price of Rs4,600 per share. BAL is one of the largest players in the two-wheeler space in India.

5. UPL LTD, also completed its buyback of Rs1,100 crore during the year through open market route. The entire buyback was executed at a price of Rs875 per share and was executed between 07th April 2022 and 20th May 2022.
    

6. GAIL India Ltd was one of the few PSUs to undertake buyback of shares during the year. GAIL India Ltd issued a tender offer for 569.86 lakh at a price of Rs190 per share aggregating to Rs1,082 crores. The entire deal was executed between 25th March 2022 and 07th June 2022 during the current year.
    

7. One 97 Communications (Paytm) is a rather surprising addition to this list as it has been making perpetual losses due to high cash burn. Now, to prop up the investor interest in the stock and to give a feeling of satisfaction to the early investors, One 97 Communications Ltd issued buyback of Rs850 crore through the open market at an exorbitantly high price of Rs810 per share. The buyback commenced on 21st December 2022 and will be executed fully by 19th June 2023. However, the buyback has become fairly controversial as the company has not even showed signs of getting into serious operating profits and the entire buyback is being funded by the share premium account.
    

8. Triveni Engineering & Industries Ltd, the sugar company, also issued buyback of shares worth Rs800 crore. A total of 228.57 lakhs shares were bought back at Rs350 apiece via the tender offer method.
    

9. Zydus Lifesciences was the only pharma company doing a buyback. It bought back 115.39 lakh shares at a price of Rs650 per share aggregating to Rs750 crore. The transaction was fully executed between 23rd June 2022 and 06th July 2022.
    

10. MOIL Ltd was the only PSU other than GAIL India in this list. It issued a tender offer for 338.43 shares at a price of Rs205 apiece aggregating to a total buyback value of Rs694 crore. The offer was open between 28th January 2022 and 10th February 2022.