Wipro Buyback: IT major Wipro’s Rs 12,000 crore buyback record date has been fixed as June 16, which means shareholders who hold Wipro shares as of June 16 (Friday) would be eligible to participate in the issue. The country’s third-largest software exporter in April announced a buyback of 26.97 crore shares from its shareholders on a proportionate basis through a tender offer.
“The buyback will be conducted on a proportionate basis through the tender offer route as prescribed under the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 2018, as amended, and the Indian Companies Act, 2013, as amended, and rules made thereunder, including any statutory modifications or re-enactments thereof, from all holders of Equity Shares who hold Equity Shares as of Friday, June 16, 2023, the record date for the buyback,” Wipro said.
The buyback price is Rs 445 per share, aggregating Rs 12,000 crore, which is 5.72 per cent of its market capitalisation.
While the general acceptance ratio in the buyback is expected to be around 4 per cent, the figure could touch as much as 40 per cent in the retail category.
What Should Investors Do?
Wipro’s share buyback offers an opportunity for retail investors to earn between 4 per cent and 13 per cent, depending on the extent of the acceptance of the buyback offer, said analysts at SBI Securities.
In the retail segment, IIFL Securities expects an acceptance ratio of around 40 percent, based on the shareholding data.
“This is a high-risk trade in which the acceptance ratio continuously varies. We have arrived at a breakeven price of Rs 290 per share based on the assumption of 60 per cent acceptance ratio. However, if the acceptance ratio changes to 35 percent the breakeven would be at Rs 350 per share. We do believe that acceptance ratio is likely to be north of 60 percent, considering the almost 100 percent acceptance ratio seen for small investors in the last buyback offer in 2020,” said ICICI Direct in a report.
Meanwhile, Emkay Global has recommended clients to buy Wipro shares and tender at Rs 445 in the offer period. “We expect acceptance ratio to be between 10-15 percent (non-retail) considering 25-50 percent tendering by large shareholders,” it said.
In a note, AUM Capital said Wipro had closed FY23 with the strongest-ever bookings recorded in a year where it delivered two consecutive quarters of total bookings of over $4.1 billion. “It is witnessing a visible change in the structure of its deals and its market position and is in the process of winning large transformation deals, benefitting from a consolidating market through deepening relationships with existing clients,” it said.
For the June quarter, Wipro expects the revenue from the IT Services business including India State Run Enterprise (ISRE) to be in the range of $2,753 million to $2,811 million, which translates to sequential guidance of minus 3 per cent to minus 1 per cent in constant currency terms.
On Thursday, the scrip was trading at Rs 392 apiece, down 1.60 per cent on the NSE at 11:06 am. Wipro shares, one of the biggest underperformer of the Nifty 50 index, have fallen 11 per cent in the last one-year period. Meanwhile, the benchmark Nifty50 index has gained 20 per cent in the same period.
Technical View
In terms of technicals, the counter’s 14-day relative strength index (RSI) was at 52.9. A level below 30 is defined as oversold while a value above 70 is considered overbought. Wipro traded higher than the 50-day, 100-day and 150-day moving averages but lower than the 5-day, 20-day, 30- and 200-day moving averages.
The stock has an average target price of Rs 416.69, according to data from Trendlyne, suggesting a potential upside of 6 percent from the current market levels. The scrip has a one-year beta of 1.1, indicating high volatility.
Wipro Buyback History
Wipro, in 2020, launched Rs 9,500-crore buyback and bought back 23.75 crore shares at Rs 400 a share. Historically, the company has announced four share buybacks in 2020, 2019, 2017, and 2016.
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