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Wipro had carried out an Rs 11,000 crore share buyback programme in 2017.
Wipro had carried out an Rs 11,000 crore share buyback programme in 2017.

Wipro considers bonus issue, shares zoom

  • Wipro board will also consider a proposal for issue of bonus shares at the meeting on January 17-18
  • Apart from Wipro, other IT stocks were also in the spotlight today, with Infosys up 3.6% and TCS advancing 1.7%

Wipro is considering a proposal to issue bonus shares, sending its shares as much as 6% higher today. In a communication to BSE, Wipro informed that its board will meet on January 17-18 to consider financial results for the quarter ended December 31, 2018, and declaration of interim dividend, if any, for the financial year 2018-19. The board will also consider a proposal for issue of bonus shares at the meeting. If Wipro announces a bonus issue, it will be second such move by the Bengaluru-headquartered IT services company in two years. In 2017, Wipro had announced a 1:1 bonus issue.

Cash-rich Indian IT companies have been returning cash in their books to shareholders through buybacks and dividends. Also in 2017, Wipro had carried out an 11,000 crore share buyback programme.

When a company announces bonus issue, the number of outstanding shares goes up as investors get extra shares. The face value of a company’s share does not change but it increases the liquidity of shares in the market. Bonus issues may also result in higher dividends for investors because of higher number of shares. Analysts say that bonus issuance signals that the company may increase its profitability to justify expanded equity base.

Infosys, which announced Q3 earnings last week, had also approved an 8,260-crore share buyback, the second in less than 13 months’ time. Infosys also declared a special dividend of 4 per share. Last year, Infosys had also approved 1:1 bonus issue to celebrate 25 years of stock market listing.

TCS, India’s biggest IT services exporter, had also carried out a 16,000 crore share buyback last year.

Apart from Wipro, other IT stocks were also in the spotlight today, with Infosys up 3.6% and TCS advancing 1.7%. In comparison, the benchmark index, Sensex, was up nearly 1%.

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