How the acceptance ratio is worked out

Two categories, two pools

Call the number of shares the company will repurchase B. The reserved pool for small shareholders is R: 15% of B, or the small shareholders’ entitlement by holding if that is higher (proviso to Reg 6). The general pool is B − R.

Who is small is fixed on the record dateRecord date. The day whose closing holdings decide who is entitled. Shares acquired on the record date itself settle too late to count. Learn more: holdings worth up to ₹2 lakh at that day’s close on the exchange with the highest volume (Reg 2(i)(n)), with same-PAN accounts added together.

The entitlement ratio

Each category’s entitlementEntitlement. The number of shares per holding a buyback guarantees to accept, set from record-date holdings, for example 11 for every 71 held. Learn more is its pool divided by what the category holds on the record date (Reg 9(ix)):

Small: E_s = R ÷ H_s
General: E_g = (B − R) ÷ H_g

The letter of offer prints these as “x for every y”, for example 11 for every 71. Since 20 November 2024, the shares of a promoter who declares that it will not take part are left out of the general category’s holding (proviso to Reg 4(iv)(a)), which raises everyone else’s ratio.

Acceptance in three steps

Regulation 9(x) sets the order:

1. Up to entitlement. Every tender is accepted up to the holder’s entitlement.
2. Spare room in the category. Entitlement left unused (by holders who did not tender, or tendered less) is shared among holders in the same category who tendered more than their entitlement, in proportion to their excess.
3. Spare room across categories. If one category still has room after step 2, it goes to the other category’s remaining excess tenders, again in proportion.

The final ratio for a category is the shares accepted divided by the shares tendered.

Worked through

Now suppose only 1,00,000 small shares are tendered. The small category accepts all of them and has 50,000 shares of room left. Step 3 passes that room to the general category, whose pool becomes 9,00,000 against 51,00,000 tendered: 17.6% instead of 16.7%.

Why an estimate is a range

Every input above is printed in the letter of offer except one: how many holders will tender. That is behaviour, and it moves with the premium, the size of the buyback and the market during the window.

Dalal Street estimates the general category from a model fitted on 40 tender buybacks from 2020 to 2026, in which the share of holdings tendered rises as the premium rises. It shows the 10th to 90th percentile of the model’s errors, a nominal 80% band. During the window it recomputes from the exchange’s live total of shares tendered, widened by 1.5 points each side; a live figure is a ceiling, because more tenders can only lower it.

For small shareholders it makes no prediction: the band would be about 45 points wide. It shows the entitlement, accepted for certain, and the history: across those 40 buybacks small shareholders’ acceptance ranged from 9.6% to 100%, with a median of 36.7%.

What moves the ratio

• The premium. A bigger gap between buyback and market price draws more tenders and lowers acceptance.
• Promoters. When promoters take part they usually tender at least their entitlement, which uses up general-category room.
• The ₹2 lakh line. A rally into the record date pushes some holdings over ₹2 lakh, moving them from the small category to the general one.
• The market during the window. A falling market makes the fixed buyback price more attractive and draws more tenders.