Wipro’s ₹12,000 cr share buyback opens on June 22; stock up

IT services major Wipro saw its stock price surging 0.86% to ₹383.3 after the company unveiled details about its upcoming share buyback. The share buyback will open on June 22, 2023, and will close on June 29, 2023.

The Wipro board has approved the buyback of up to 26,96,62,921 fully paid-up equity shares, which is 4.91% of total equity shares at ₹445 per equity share worth ₹12,000 crore, a 17% premium over Monday’s closing price, the letter of offer issued today said.

The share buyback is 20.95% and 17.86% of the aggregate of the fully paid-up equity share capital and free reserves of the company.

The company has kept a 15% reservation for retail shareholders holding scrips less than ₹2 lakh. The retail entitlement ratio has been fixed at 23.4%, while for others it's 4.3%.

The company said the buyback price of ₹445 has been arrived at after considering factors like the share price benchmarks on the NSE, the stock exchange where the maximum volume of trading in the equity shares is recorded, and the net worth of the company, and the impact on the earnings per equity share.

“The buyback, which is being implemented through the Tender Offer route as prescribed under the Buyback Regulations, would involve a reservation of up to 15% of the Buyback Size for “Small Shareholders”,” said Wipro.

The company adds this reservation of up to 15% for small shareholders will benefit a large number of the company’s public shareholders, who will be classified as small shareholders for the purposes of the buyback.

The buyback will also help in improving financial ratios like earnings per share and return on equity, by reducing the equity base, said the company. "Assuming that the response to the Buyback is to the extent of 100% (full Acceptance) from all the Eligible Shareholders up to their Buyback Entitlement, the aggregate shareholding of the Promoter and Promoter Group post completion of the Buyback may increase from 72.91% to 73.37%," it said.

As per the company, the buyback is over 10% of the total paid-up equity capital and free reserves of the company, based on both standalone and consolidated financial statements as of March 31, 2023.

The shareholders of the company had approved the buyback by way of a special resolution through a postal ballot by remote e-voting on June 01, 2023, the results of which were announced on June 02, 2023. The equity shares will be listed on the NSE and the BSE. The company’s ADSs, as evidenced by ADRs, are traded in the U.S. on the NYSE.

At the time of filing the report, the shares of Wipro were trading 0.25% up at ₹381 on the BSE. The stock opened at ₹381.70, up from yesterday's close of ₹380.05. At the current share price, Wipro's m-cap stands at ₹2.09 lakh crore.

The country’s third-largest software services company reported a 0.4% year-on-year drop in its fourth-quarter net profit for 2022-23. On a sequential basis, profit rose 0.7% to ₹3,074 crore in Q4. The gross revenue rose 11.2% year-on-year to ₹23,190 crore for the January-March quarter. Revenue from IT services increased 3.7% to $2.8 billion in Q4 2022-23.