Open-market buyback set to surge as cash returns hit 3-year high

Pulkit Sukhramani, Partner at JSA Advocates & Solicitors, said buybacks through the exchange route reduce administrative burdens and offer greater timing and pricing flexibility. “Companies seeking to consolidate ownership and enhance stock value may find the open market buyback route particularly advantageous,” he added.

Only 22 companies used the exchange route in 2022 and seven in 2023 before it was scrapped. Every buyback announced in 2024, 2025 and 2026 has gone through the tender offer route. The revived mechanism includes tighter safeguards: a 66-trading-day execution window instead of six months, a requirement to complete at least 40% of the buyback during the first half of the period, enhanced disclosures, and restrictions on purchases from promoters and promoter group entities.

Companies can also execute buybacks without appointing a merchant banker, shifting compliance responsibility to the company, its compliance officer, statutory auditor, secretarial auditor and stock exchanges.

The pipeline includes Wipro's ₹15,000-crore buyback, Bajaj Auto's ₹5,633-crore offer and Zydus Lifesciences' ₹1,100-crore proposal. Cyient, TeamLease Services, Kajaria Ceramics, Rolex Rings, Dhanuka Agritech, Cybertech Systems and Gandhi Special Tubes have also announced buybacks this year.

Market participants said it is too early to assess how widely the exchange route will be adopted. Companies announcing buybacks after August 1 will have the option to use either mechanism. The first buybacks executed under the revived rules should clarify whether issuers prefer the flexibility of market purchases or the certainty of a fixed-price tender.