IT major Wipro announced Rs 12,000 crore share buyback post its March quarter results. This is Wipro's biggest share buyback in terms of size.
Wipro will buy back up to 269,662,921 shares of face value Rs 2 each from the shareholders of the company on a proportionate basis, by way of a tender offer, at a price of Rs 445 per equity shares. The share buyback would amount to Rs 12,000 crore and would represent 4.91% of total number of equity shares, Wipro said.
The process, record date, timelines, and other details of the share buyback will be communicated in the public announcement, Wipro said adding that the letter of offer will be published in accordance with the Buyback Regulations.
According to Motilal Oswal Financial Services, the large buy-back program will deplete a significant portion of cash and investments of the company and may hit its ability to maintain payout over FY24/25E.
Wipro had last come out with a Rs 9,500 crore share buyback in 2020. The company had bought back 23.75 crore shares at Rs 400 apiece. Data shows that Wipro informed about the completion of the extinguishment of shares on January 21, 2021.
Wipro came out with a Rs 10,500 crore share buyback in 2019 as well. The buyback offer size was 32.31 crore shares, which were bought back at Rs 325 per share.
In 2017, Wipro announced a Rs 11,000 crore share buyback. The company had offered to buy back 34.37 crore shares at Rs 320 apiece. The buyback shares represented 7.06% of the total paid-up share capital at that time.
In 2016, Wipro came out with a Rs 2,500 crore share buyback, wherein a total of 4 crore shares were offered to be bought back at Rs 625 apiece. The company also announced bonus issue in the ratio of 1:1 in 2017 and 1:3 in 2019.
If one includes all the share buybacks that Wipro announced since 2016, the total share buyback announced by the company stands at Rs 45,500 crore in eight years.
Wipro shares jumped 3% on Friday. The stock price could get near-term support due to buyback, said IDFC Securities in its latest note. Nirmal Bang Institutional Equities, which has a 'Sell' rating on Wipro, said it expects the buyback to provide support to the stock in the immediate term, assuming that the buyback will be executed in the September quarter.
Analysts at Motilal Oswal maintain a 'neutral' rating on Wipro stock with a target price of Rs 360, implying 14x FY25E EPS. The brokerage cut its FY24E/FY25E EPS by 7.2%/4.4%.
Emkay Global has also cut Wipro EPS estimates for FY24/25 by 1.3%/3.4%, factoring in the Q4 performance, buyback, and weak Q1 guidance. It, however, maintained a 'buy' call on the stock with a target price of Rs 470 per share.
Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position.