Wipro shares buyback: Tender route or open market purchase - How will it impact investors?

Wipro shares buyback: IT solutions major Wipro Ltd is likely to announce buyback of equity shares on Thursday, April 16. According to reports, Wipro may repurchase shares worth Rs 16,000-18,500 crore from markets. However, the company is yet to announce if the buyback will be via a tender offer or an open market purchase.

Both (tender offer and open market purchase) are modes of share buyback but there are some differences between the two. An open market buyback involves the company purchasing shares directly from the stock exchange over a prolonged period at prevailing market prices. However, such pre-announced buybacks like Wipro are usually done via a tender offer route.

Key differences: tender offer vs open market buyback

While on the other hand, a tender offer is a formal, temporary invitation to shareholders to sell shares at a fixed, often premium price within a specific timeframe, allowing proportional participation. Investors tender their shares and return depend upon the acceptance ratio based on the participation.

However, there are more differences between the two modes besides the price. Tender offers are shorter in duration, having a window of say 7-10 days to tender shares, while open market buybacks may last for several weeks to months. Tender offer allows investors to get a fixed price, which is usually a premium but open market buyback does not guarantee a fixed price.

Tender offer allows all shareholders to participate proportionately, whereas shares are bought from whoever is selling on the exchange in open market buyback, making it harder for specific shareholders to participate. Open market buybacks are usually undertaken by the companies during market fluctuations, without creating a sharp or immediate price hike.

With the tax arbitrage now gone, buybacks are no longer a structured play but a pure pricing game, said Trivesh D, COO at Tradejini. "Tender route offers a premium but comes with acceptance uncertainty, while open market ensures liquidity without price assurance. For investors today, it’s simply a trade-off between certainty of execution and probability of better returns."

Buyback of shares: New rules and taxation

India’s new buyback rules, implemented after Finance Act 2026, treat buyback proceeds as capital gains for shareholders rather than dividends, taxing only the profit. It means buyback price shall be subtracted from acquisition cost. The new rules are effective from April 1, 2026

Retail investors face a 12.5 per cent long-term tax rate, while promoters face up to 30 per cent tax, plus surcharges, increasing overall tax efficiency for shareholders but curbing promoter-driven buybacks. However, one should note that if shares are held for less than 12 months, they shall be accounted as short-term capital gains, taxed at 20 per cent.

Earlier, the entire buyback amount was treated as deemed dividend and taxed at applicable slab rates under income from other sources while acquisition cost of shares bought back was treated as capital loss, to be adjusted from short or long term capital gains or carried forward for up to eight years in case of no capital gains during the year, said Sunny Agrawal, Head of Fundamental Research at SBI Securities.

"Promoter shareholders face higher effective tax rates where corporate promoters will face an effective tax rate of 22 per cent while non-corporate promoters will face an effective tax rate of 30 per cent. A flat surcharge of 12 per cent will also apply specifically to the additional tax payable by promoters," he added.

Wipro buyback details

If announced, this will be Wipro's first buyback after three years. Prior to this, it had announced a Rs 12,000 crore buyback ins April 2023 at Rs 223 apeice, a premium of 18 per cent for the investors. The cash balance of Wipro stood at Rs 41,510 crore for the quarter ended on December 31, 2025, highest among top-5 IT companies.

Wipro Q4 results preview

For Wipro, revenue growth guidance for the quarter is 0-2 per cent and we expect 1 per cent QoQ revenue growth, also helped by Harman integration. Its margin is likely to contract 30 bps QoQ to be dragged by Harman integration (low -margin business) and one-month wage hike, said Elara Capital, with a 'reduce' rating and a target price of Rs 205 on it.

Wipro's Q4FY26 organic-growth guidance still flags hurdles ahead. Management says it will keep the margin band tight despite headwinds from the Harman DTS acquisition, divergent large-deal margin profiles and possible 4Q wage hikes. It continues to underperform peers on revenue growth, yet its valuation discount to larger rivals sits well below the historical median, said BNP Paribas.

"With revenue slated to slip in the coming quarter, we see a risk of either a margin reset or a capability overhaul through an acquisition, neither of which offers an easy recovery path. An elevated dividend payout provides modest valuation support, but the narrow peer NTM P/E discount makes a constructive case difficult. We maintain our 'Underperform' rating," with a target price of Rs 210.

Wipro's revenue may grow by 3 per cent QoQ because of higher contribution from the Harman acquisition. EBIT margin to improve by 138 bps QoQ due to higher topline growth and currency tailwinds despite wage hike impact, said Axis Securities. "Key monitorables include outlook on European business, new deal wins, and commentary on inorganic growth," it added with a hold' rating and a target price of Rs 290.