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Market Intelligence › Basic Terminologies
The difference between the tender route and the open market route, and the real arithmetic of the acceptance ratio
Published by The Retail Trader · JUL 31, 2026 · Market Basics
In a buyback, the company buys back its own shares and cancels them. This reduces the outstanding shares, and every remaining shareholder's stake becomes slightly bigger. The idea is straightforward; the execution is not.
In the tender route, the company makes an offer at a fixed price and you put your shares into the offer. Here there is often a reserved portion for retail.
In the open market route, the company buys shares from the market itself through normal trading. You do not have to do anything, and there is no guarantee that it is your shares that will be sold.
This is where the biggest misunderstanding in a tender buyback happens:
• At the offer price, not all your shares are taken — only according to a ratio.
• The more people tender, the lower the ratio will fall.
• The shares that are not accepted stay with you, and their price can go anywhere after the buyback.
• So the calculation "the buyback price is higher, so the profit is certain" is not the complete calculation.
Read a buyback as a signal, not as a trade. A buyback by a cash-rich company says one thing; a buyback done with borrowed money says something completely different.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics are changed by the exchanges, SEBI and RBI from time to time, so verify every number yourself with your broker or the official source.