Wipro share buyback: Should investors tender shares in buyback?
2 min read 16 May 2023, 02:25 PM ISTWipro share buyback price of ₹445 is around 15% premium to the current market price of ₹387 apiece, which analysts believe to be a good opportunity for investors.
PremiumIT major Wipro recently announced a share buyback programme worth ₹12,000 crore through a tender route. The company will buyback shares at ₹445 apiece from investors.
Wipro said that its board approved buyback of up to 26.96 crore equity shares, which is 4.91% of total number of equity shares on a proportionate basis, in the offer period.
Wipro share buyback price of ₹445 is around 15% premium to the current market price of ₹387 apiece, which analysts believe to be a good opportunity for investors.
Emkay Global Financial Services said investors can purchase Wipro shares at current market price and tender them at ₹445 in the offer period.
Meanwhile, Wipro share price has fallen over 17% in the last one year period.
The promoters of Wipro, holding nearly 73% of the total shareholdings, are likely to participate in the buyback offer. The company has not yet announced the record date, timelines, and other details of the offer.
“We expect acceptance ratio to be between 10-15% (non-retail) considering 25-50% tendering by large shareholders," Emkay Global said.
Wipro’s previous buyback was worth ₹9,500 crore and was carried between December 29, 2020, to January 11, 2021.
Read here: Wipro Share buyback: IT major announces Rs12,000 crore buyback; here are 10 key points to know
As of March 31, 2023, Wipro’s promoter and promoter group shareholding stood at 72.92%. Foreign investors held about 53.67 crore equity shares or 9.78% in Wipro.
During the fourth quarter of FY23, Wipro reported weak earnings on the back of uncertain macroeconomic environment. The company’s Q4FY23 consolidated net profit dropped 0.4% to ₹3,075 crore from ₹3,053 crore. Its revenue from operations as a whole increased by 11.2% to ₹23,190 crore from ₹20,860 crore, YoY.
The company’s revenues in constant currency dropped 0.6% sequentially, while dollar revenue rose by 0.7%, QoQ.
ICICI Direct downgraded the stock to Reduce from Hold with and cut the target price to ₹350 from ₹355 earlier as it expected the company to see weakest growth at 2.9% YoY CC in FY24 among its peer set given muted growth outlook.
The brokerage said that post buyback, Wipro will have $1.5 billion of net cash on balance sheet and the buyback size was in line with its strategy to maintain payout at 45-50%.
At 2:20 pm, the shares of Wipro were trading 0.35% higher at ₹387.10 apiece on the BSE.
