India Inc. may be entering a new share buyback cycle, as conditions have improved following recent policy changes, according to Pankaj Tibrewal of Ikigai Asset Manager. He noted that favorable tax changes, strong corporate balance sheets, and supportive valuations are driving this revival after a significant decline in FY25.
Buybacks, which enhance shareholder ownership, had previously seen a robust cycle from FY17 to FY24, with NSE 500 companies deploying nearly Rs 2.9 lakh crore for repurchases. However, a tax overhaul in October 2024 caused buybacks to plummet by 88% in FY25. The recent Budget 2026 has shifted buybacks back to a capital gains framework, reducing the effective tax to approximately 5.3% of gross proceeds.
Tibrewal highlighted that sectors like Energy, IT, Consumer Discretionary, and Industrials are well-positioned for buybacks due to strong cash flows and valuations below their 10-year averages. He also mentioned that regulatory changes could further support buybacks, although risks remain, including potential macroeconomic slowdowns and regulatory uncertainties.
