Wipro Buyback: Wipro’s mega buyback, worth Rs-12,000 crore, hit D-Street Today (June 22). The Bengaluru-based IT major’s share buyback offer is open till June 29.
The Nifty company is planning to buy back about 26.97 crore shares at Rs 445 per share through the tender route, which is at a premium of 15 per cent over Wednesday’s closing price of Rs 386.
Reserved Portions
The Bengaluru-based IT major’s share buyback offer is open till June 29. Wipro has reserved about 15 percent, or 4 crore shares, for retail investors — those who own less than Rs 2 lakh worth shares, amounting Rs 1,800 crore. Wipro promoters would be participating in the issue and could tender up to 3,91,74,17,716 shares.
In a letter of offer issued earlier, Wipro said for retail investors, the entitlement ratio — the indication of minimum shares that the company will definitely accept in the buyback — has been fixed at 23.4 per cent, while for others it is 4.3 percent.
To recall, the company’s board had approved the share buyback on April 27 and the record date for the same was June 16.
Entitlement ratio
The entitlement ratio is the minimum number of shares that the company will accept in the buyback. The actual number may go up depending on how many investors offer their shares for the buyback.
Shareholders will get unaccepted shares by July 6 while shares bought back under the scheme would be extinguished by July 17.
How to Tender Shares
Shareholders interested in tendering shares in the buyback process can do it through their stock brokers.
Shareholders will need to instruct their respective stock broker of the details of the equity shares intended to be tendered under the buyback.
“In accordance with applicable law, a lien shall be marked by the stock broker in the demat account of the eligible shareholder for the shares tendered in tender offer. Details of such lien marked shares in the demat account of the eligible shareholder shall be provided by the depositories to the clearing corporation,” Wipro said in a letter of offer.
Share Price History
Shares of Wipro have declined 7.74 per cent in the last one year compared to the 7.3 per cent gains in the NSE IT index and 23 per cent gain in the benchmark Nifty.
Purpose of the Share Buyback
The buyback is being undertaken by the company to return surplus funds to its equity shareholders, which are over and above its ordinary capital requirements and in excess of any current investment plans, in an expedient, effective and cost-efficient manner.
Should You Tender Shares?
“This is a high-risk trade in which acceptance ratio continuously varies. We have arrived at a breakeven price of Rs 290 per share based on the assumption of a 60 per cent acceptance ratio. However, if the acceptance ratio changes to 35 per cent, the breakeven would be at Rs 350 per share. We do believe that the acceptance ratio is likely to be north of 60 per cent,” the brokerage said in a report, dated May 19.
Meanwhile, Ravi Singhal, CEO at GCL broking said, “As we can see that the stock is trading near lows of 2023. At this point, it is advisable to buy the stock, with stop loss at Rs 365. Expectation of acceptance is 25 percent plus. And prices can go up to 444 in one year.”
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