Wipro Ltd shares turned ex-bonus in the ratio of 1:1 today. Adjusted for the bonus issue, the Wipro stock was trading 1.09 per cent higher at Rs 295.50 on BSE at open. But the scrip was down 49.45 per cent over yesterday's closing price (unadjusted) of Rs 584.55. It is possible that trading apps of certain brokerages might be showing the unadjusted Wipro share price for yesterday and, thus, suggesting a 50 per cent-odd fall on the counter.
Since December 3 is the record date for the corporate action, Wipro will determine eligible shareholders for bonus issue today only. The bonus share would be credited to investors soon.
A bonus issue increases the number of outstanding equity shares, but reduces share price in proportion to the number of bonus shares issued. Bonus shares are issued from free reserves and surplus of the company, with the aim of increasing liquidity on the counter. In the case of Wipro Ltd, the bonus ratio was set at 1:1, which means one new fully paid-up share of Wipro would be issued to existing shareholders for every one share they held.
Wipro had an aggregate amount of Rs 56,808 crore as at September 30, consisting of free reserves, securities premium account and capital redemption reserve account. Post the bonus issue, the paid-up equity share capital of Wipro is expected to be around Rs 20,925,943,128, consisting of 10,462,971,564 equity shares of Rs 2 each.
The actual number of bonus equity shares to be issued will be determined based on the fully paid-up equity share capital as on the record date i.e. today.
This bonus issue is Wipro's first since 2019. Wipro's 2019 bonus shares were issued in 1:3 ratio. The stock went ex-bonus on March 6, 2019. Wipro had declared bonus shares in the ratio of 1:1 in 2017. Before that, Wipro announced bonus shares in the ratio of 2:3 in 2010. It announced bonus shares in 2005 (1:1) and 2004 (2:1). In 1997, Wipro declared a bonus issue in the 2:1 ratio. It also announced 1:1 bonus issues each in 1995 and 1992.
Last year, the IT major also came out with a share buyback plan.
The demand environment has been challenging for Wipro of late, as the IT firm is facing certain client-specific issues. But there has been initial signs of uptick in the BFSI vertical. Analysts said the current combination of a favourable portfolio, new CEO Srini Pallia and inexpensive valuations make for an attractive risk-reward profile for Wipro.