Is the buyback shareholder friendly?
• Buyback are generally shareholder friendly for the existing shareholders because the reduction in the outstanding shares increases the company’s return on equity.
• But in the case of Aarti Drugs, the buyback price of Rs 1000 is favoring the exiting shareholder rather than the existing shareholder.
• On 20 March 2020, the price was Rs 122. Buyback at that price would have been friendly to the existing shareholder.