Minor Project Report

On

Buy-back on share Price

(Case study of paytm)

Submitted in partial fulfillment of the requirement for the award of the

Degree of Bachelor of Bussiness Of Adminstration of

Guru Goibind Singh Indraprastha University, Delhi

Submitted to :

Mrs. Nisha Rai Submitted by:

Rajat Singhal

06316701722

Sirifort Instiute of Management Studies

Plot no 8,Industional area, sec-25,Rohin,New Delhi

 DECLARATION

I Rajat Singhal Student of Sirifort Institute of Management, Center for Bachelor of

Bussiness Adminstation (part 1). Hereby I declare that I have completed the project in
academic year of 2022-2023 on

“Buy-back on Share Price”

All above information is true and original to the best of my knownledge.

___________________
Rajat Singhal
06316701722
 Certificate

This is to certify that, Rajat Singhal (06316701722) has successfully completed the
project title ““Buy-back on Share Price case study of Paytm” under my guidnece
for the Academic year2022-2023.The information submitted is true and origanl as
per guidance my knowledge.

________________

Mrs. Nisha Rai

 ACKNOWLEDGEMENT

Many have contributed to the successful completion of this project. I would like to place
on record my grateful thanks to each of them, and report would be incomplete without
giving due to them.

I feel extremely exhilarated to have completed this project under the able and inspiring
guidance of Mrs. Nisha Rai, her guidance and timely encouragement has infused
courage in me to complete the work successfully.

In the end I sincerely thank all the respondent , friends and all others who helped in
completion of this project.

______________

(Signature)
Index
 Chapter 1
What is Market?
1.1 INTRODUCTON
The share market, also known as the stock market or equity market, is a platform
where buying and selling of company stocks or shares take place. It provides
individuals and institutions the opportunity to invest in publicly traded
companies. When you buy shares of a company, you become a partial owner and
may benefit from the company's success through dividends or by selling the
shares at a higher price in the future. The share market plays a crucial role in
capital formation and economic growth, as it allows companies to raise funds for
expansion and investors to participate in the growth of businesses.

1.2.1 OBEJECTIVE OF SHARE MARKET FROM THE PURPOSE OF

INVESTORS
From an investor's perspective, the objective of participating in the share market
can vary based on individual goals and strategies. However, some common
objectives include:
1. Capital appreciation: Investors aim to buy shares at a lower price and sell them
at a higher price, seeking to profit from the increase in share value over time.
2. Dividend income: Certain companies distribute a portion of their profits as
dividends to shareholders. Investors may invest in such companies with the
objective of earning regular income from these dividends.
3. Portfolio diversification: Investing in the share market allows investors to
diversify their investment portfolio by spreading their funds across different
companies and industries. This strategy aims to reduce risk by not having all
investments concentrated in a single asset or sector.
4. Long-term wealth creation: Investors may choose to invest in the share market
with a long-term perspective, aiming to accumulate wealth over time through
capital appreciation and reinvesting dividends.
5. Participating in a company's growth: By investing in the share market,
individuals can become part-owners of companies and have the opportunity to
benefit from their growth and success.
It's important to note that investing in the share market carries risks, and
investors should carefully consider their financial goals, risk tolerance, and
conduct thorough research before making investment decisions.

1.2.2 OBEJECTIVE OF SHARE MARKET FROM THE PURPOSE OF

COMPANIES
From the perspective of a company, the primary objective of participating in the
stock market is to raise capital or funds for its operations, expansion, and
investment opportunities. By issuing shares of stock to the public through an
initial public offering (IPO) or subsequent offerings, companies can sell
ownership stakes in the business to investors. This allows them to generate the
necessary funds to finance their business activities and achieve various
objectives, such as:
Capital raising: The stock market provides a platform for companies to raise
capital by selling shares to investors. This capital can be used to fund research
and development, launch new products or services, expand operations, acquire
other businesses, or invest in infrastructure and technology.
Enhancing liquidity: By listing on a stock exchange, a company's shares become
tradable, allowing shareholders to buy or sell their holdings easily. This enhances
the liquidity of the company's stock, providing an exit option for early investors
or shareholders seeking to diversify their portfolios.

Establishing a market value: The stock market allows the company's shares to be
publicly traded, which facilitates the determination of the company's market
value. The stock price reflects market sentiment, investor confidence, and
expectations regarding the company's future performance, providing an indicator
of its overall worth.Attracting investors and stakeholders: Being publicly traded
enables a company to attract a wide range of investors, including individual retail
investors, institutional investors, and mutual funds. This broadens the
shareholder base and increases the company's visibility, which can contribute to
its credibility and reputation.
Incentivizing employees: Publicly traded companies often offer stock options or
equity-based compensation to their employees. This serves as an incentive for
employees to work towards increasing the company's stock price and
shareholder value, aligning their interests with those of the company and its
investors.
Enhancing the company's profile and brand awareness: Listing on a stock
exchange can raise a company's profile and increase its visibility in the market. It
provides an opportunity to communicate the company's vision, achievements,
and growth prospects to a wider audience, including potential customers,
suppliers, and partners.
Benchmarking performance: The stock market provides a benchmark against
which a company's performance can be evaluated. Shareholders and analysts
assess a company's financial results, growth trajectory, and strategic initiatives
by comparing them to industry peers and market indices. This evaluation can
help identify areas for improvement and enhance corporate governance.
It's important to note that while the stock market offers significant benefits to
companies, it also comes with regulatory requirements, transparency obligations,
and the need to meet the expectations of shareholders and the broader
investment community.
1.3 OBEJECTIVE OF SHARE MARKET FROM THE PURPOSE OF
COMPANIES
People can make losses in the stock market for various reasons. Here are some
common factors that contribute to investment losses:
1.Market Volatility: The stock market is subject to fluctuations in prices due to
various factors like economic conditions, geopolitical events, market sentiment,
and investor behavior. These fluctuations can result in the decline of stock
prices, causing losses for investors.

2.Lack of Research and Knowledge: Investing without conducting proper

research and acquiring sufficient knowledge about the companies and industries
can be risky. It's essential to understand the fundamentals of investing, perform
due diligence on the companies you invest in, and stay updated on market trends
and news.

3.Emotional Decision-Making: Emotional decision-making, such as buying or

selling stocks based on fear, greed, or panic, can lead to poor investment choices
and losses. Investors may make impulsive decisions during market downturns or
speculative bubbles, disregarding rational analysis and long-term investment
strategies.

4.Lack of Diversification: Concentrating investments in a few stocks or a single

sector exposes investors to higher risk. Diversification across different asset
classes, industries, and geographies helps to spread risk and potentially mitigate
losses if one investment underperforms.

5.Market Timing: Trying to time the market, i.e., predicting short-term price
movements and buying or selling stocks accordingly, is challenging and often
results in losses. Even experienced investors struggle to consistently time the
market accurately. Successful investing typically involves a long-term
perspective, rather than frequent trading based on short-term market
fluctuations.

6.Overleveraging and Margin Trading: Using borrowed money or trading on

margin can amplify both gains and losses. While leverage can increase potential
profits, it also exposes investors to significant risks. If investments decline in
value, the losses can surpass the initial investment, resulting in significant
financial setbacks.

7.Lack of Patience and Discipline: Successful investing requires patience and

discipline. Investors who panic during market downturns and sell their holdings
at low prices often miss out on potential recoveries. Similarly, impulsive buying
or selling decisions driven by short-term market movements can lead to losses.

8.Scams and Fraud: Unfortunately, fraudulent activities and investment scams

exist in the stock market. Unscrupulous individuals or entities may promote
fraudulent investment schemes, promising high returns and deceiving investors.
Falling victim to such scams can result in substantial financial losses.
It's important for investors to be aware of these risks, exercise caution, and
consider seeking advice from financial professionals when entering the stock
market. Investing in stocks carries inherent risks, and losses are a possibility. It's
crucial to have a well-defined investment strategy, set realistic expectations, and
diversify investments to manage risk effectively.

1.4 TYPES OF SHARES IN MARKET

In the stock market, there are several types of shares that represent ownership in
a company. Here are some common types of shares:
1.Common Shares: Common shares, also known as ordinary shares, are the most
common type of shares. They represent ownership in a company and give
shareholders voting rights at shareholder meetings. Common shareholders may
receive dividends, which are a portion of the company's profits distributed to
shareholders. However, in the event of liquidation or bankruptcy, common
shareholders have the lowest priority in terms of receiving assets.

2.Preferred Shares: Preferred shares are a type of stock that has a higher claim
on a company's assets and earnings compared to common shares. Preferred
shareholders have a fixed dividend rate, meaning they receive dividends before
common shareholders. They also have a higher priority in the distribution of
assets in case of liquidation. However, preferred shareholders usually do not
have voting rights or the same level of ownership control as common
shareholders.

3.Voting Shares: Voting shares are shares that carry the right to vote on matters
affecting the company. They allow shareholders to participate in corporate
decisions, such as electing the board of directors or approving major changes.
Common shares are typically voting shares, granting shareholders the ability to
exercise their voting rights. On the other hand, preferred shares generally do not
have voting rights, although some preferred shares may have limited voting
privileges.

4.Non-Voting Shares: Non-voting shares, as the name suggests, do not carry

voting rights. These shares are often issued to investors who wish to invest in a
company but do not desire voting privileges. Non-voting shares still offer
ownership in the company and may be entitled to receive dividends, but
shareholders do not have a say in corporate decisions.

5.Class A and Class B Shares: Some companies may issue multiple classes of
shares, typically denoted as Class A, Class B, and so on. Each class may have
different rights and privileges. For example, Class A shares may have superior
voting rights compared to Class B shares. These different classes of shares are
usually created to allow founders or key stakeholders to maintain control over the
company while raising capital from other investors.
It's important to note that the specific types and characteristics of shares may
vary between companies and jurisdictions. Additionally, there may be other
specialized types of shares, such as redeemable shares or convertible shares,
which have unique features tailored to specific circumstances.

xxx
 Chapter 2
Conept of Buy-back
2.1 CONECPT OF BUY-BACK
The concept of buyback, also known as share repurchase, refers to a corporate
action where a company purchases its own outstanding shares from existing
shareholders. This process involves the company using its available funds to buy
back shares of its own stock from the open market or directly from shareholders
who are willing to sell.

Buybacks can be seen as a way for a company to return value to its shareholders.
By reducing the number of outstanding shares in the market, the ownership
percentage of existing shareholders increases, potentially boosting the stock's
value. This can be especially beneficial for investors who choose to hold onto
their shares after the buyback, as their ownership stake becomes larger relative
to the total shares outstanding.
Companies engage in buybacks for various reasons. One common motive is
capital management. When a company has excess cash on hand, it may choose
to repurchase shares as an alternative to other uses of capital, such as dividends
or acquisitions. By buying back shares, the company effectively invests in itself,
expressing confidence in its own future prospects.
Buybacks can also be used as a way to signal confidence to the market. When a
company announces a buyback program, it indicates to investors that
management believes the stock is undervalued. This can instill confidence in
shareholders and potentially attract new investors.
Another objective of buybacks is to consolidate ownership. By reducing the
number of outstanding shares, buybacks can help concentrate ownership in the
hands of long-term investors or key stakeholders. This can provide management
with more control and flexibility in decision-making.

It's important to note that buybacks are subject to regulatory and legal
restrictions, including rules on the maximum amount of shares that can be
repurchased and the method by which they are acquired. Additionally, the
decision to engage in a buyback should consider the company's financial
position, cash flow, and long-term strategic goals.

Overall, the concept of buyback involves a company repurchasing its own shares
from existing shareholders, often with the aim of returning value to shareholders,
signaling confidence, or consolidating ownership.
2.1 HOW BUYBACK ON SHARE PRICE IS DONE???
A share buyback, also known as a stock repurchase, is a process through which
a company purchases its own shares from existing shareholders. This can be
done for various reasons, such as returning excess cash to shareholders,
increasing the value of remaining shares, or consolidating ownership.

The process of a share buyback typically involves the following steps:

1. Authorization: The company's board of directors authorizes the buyback

program, specifying the maximum amount of shares that can be repurchased and
the timeframe for the buyback.

2. Announcement: Once authorized, the company announces the share buyback

program to the public, providing details about the number of shares to be
repurchased, the intended timeframe, and the method of repurchase.

3. Method of Repurchase: There are several methods a company can use to buy
back shares. The two most common methods are open market purchases and
tender offers. In open market purchases, the company buys shares from the open
market, just like any other investor. Tender offers involve the company making a
public offer to its shareholders to buy back their shares at a specified price.

4. Financing: The company needs to ensure it has adequate funds to finance the
share buyback. This can be done through various means, such as using cash
reserves, taking on debt, or using surplus cash flow.

5. Execution: Once the buyback program is announced and the necessary funds
are available, the company begins purchasing shares as per the authorized plan.
This can be done through a designated broker or a financial institution.
6. Reporting: Throughout the buyback period, the company is required to
disclose its progress in repurchasing shares through regular updates to the
shareholders and regulatory authorities. This information is typically included in
the company's financial statements.

7. Completion: Once the authorized number of shares is repurchased or the

specified timeframe is reached, the buyback program is considered complete.
The company may choose to retire the repurchased shares, reducing the total
number of outstanding shares, or keep them as treasury shares for future use.

It's important to note that the process of a share buyback can vary depending on
the jurisdiction and specific regulations governing the company. Companies
must comply with applicable laws and regulations to ensure transparency and
fairness throughout the process. Shareholders also have the right to participate
or decline to participate in a share buyback program.