Wipro shares gain as IT firm says share buyback to open on June 22

Shares of Wipro gained half-a-per cent in Tuesday's trade, snapping a three-day losing streak after the IT major announced date for the kick start of Rs 12,000 crore share buyback plan. On NSE, Wipro shares were trading 0.49 per cent higher at Rs 382 in the first few minutes of trading. The stock had fallen in the previous three sessions. As per Wipro's letter of offer to its shareholders, the share buyback will open on June 22 and close on June 29. Eligible shareholders of Wipro can tender their shares in the buyback during this tendering period.

As per the provisions of the buyback regulations, the IT firm will pay gross amount i.e. number of equity shares accepted multiplied by the buyback price of Rs 445  per share for the accepted shares to the clearing corporation of the stock exchanges. Eligible Shareholders whose shares have been accepted under the buyback will directly receive the consideration from the clearing corporation/stock broker.

To recall, the Wipro board had approved the share buyback on April 27 and the record date for the same was June 16. At Tuesday's price, the buyback price of Rs 445 was at a 16.49 per cent premium to the prevailing price of Rs 382.

Wipro has reserved 15 per cent, or 4 crore shares, for retail investors, amounting Rs 1,800 crore. Aamar Deo Singh, Head Advisory at Angel One anticipated the acceptance ratio to reach 40 per cent for the retail segment. He said the potential returns overall appear to be favourable. "However, it is important to keep in mind that share price performance for Wipro has changed in the past following share buybacks."

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The Bengaluru-based IT firm is looking to buy back up to 269,662,921 shares of face value Rs 2 each on a proportionate basis, by way of a tender offer, at a price of Rs 445 per equity shares. A total of 15 per cent of the shares in the buyback are reserved for retail investors -- those who own less than Rs 2 lakh worth shares. Wipro promoters would be participating in the issue and could tender up to 3,91,74,17,716 shares.

The final number of shares the company will purchase from each shareholder will be based on the total number of shares tendered. It would depend on acceptance ratio, which suggests the percentage of tendered shares that will be accepted for repurchase. Accordingly, the company may not purchase all of the shares tendered by a holder of equity shares.

Anubhuti Mishra, Equity Research Analyst at Swastika Investmart noted that June 15 was the last date to buy Wipro's shares to be eligible to participate in the company's share buyback. "The share is currently trading around Rs 389, so as of today, the calculated premium is more than 14 per cent, so we will advise retail investors you to take part in this buyback. Furthermore, we anticipate an acceptance ratio of around 40 per cent, which has the potential to increase to 60 per cent. This expectation is supported by the fact that retail investors experienced an almost 100 per cent acceptance ratio in the previous buyback offer in 2020," Mishra said.

Wipro share buyback history

Wipro had last came out with a Rs 9,500 crore share buyback in 2020. The company had bought back 23.75 crore shares at Rs 400 apiece then. As per data available with AceEquity, the IT major announced about the completion of the extinguishment of shares on January 21, 2021.Before this, the company came out with a Rs 10,500 crore share buyback in 2019. The buyback offer size was 32.31 crore shares, which were bought back at Rs 325 per share. Wipro had announced a Rs 11,000 crore share buyback in 2017. That time, the company had offered to buy back 34.37 crore shares at Rs 320 apiece. The buyback shares represented 7.06 per cent of the total paid-up share capital then.

Wipro also came out with a Rs 2,500 crore share buyback in 2016. A total of 4 crore shares were offered to be bought back at Rs 625 apiece then. Meanwhile, Wipro announced bonus issue in the ratio of 1:1 in 2017 and 1:3 in 2019.

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