Wipro Buyback: IT major Wipro share buyback program presents an opportunity for short-term traders and investors to profit by participating in the same. The 12,000 crore buyback of the IT major is seen as a smart opportunity for investors to make a quick buck.
Wipro Buyback Details
The buyback issue from the country’s third largest software exporter is likely to open in June-end and was announced last month. It includes a buyback of 26.97 crore shares from its shareholders on a proportionate basis through a tender offer at a price of Rs 445 per share.
The buyback will lead to the extinguishment of 4.91 per cent shares of the company and 15 per cent of the issue will be reserved for the retail shareholders with holdings worth less than Rs 2 lakh.
Market analysts expect an acceptance ratio of around 40 per cent in the retail category and up to 15 per cent in the non-retail segment on the basis of shareholding data. However, the entitlement right will be clearer on the final letter for the offer is out in the public domain.
Retail acceptance is likely to be around 40 per cent (4.04 crore shares), while general acceptance is seen at 4.2 per cent (22.92 crore shares), suggests a report from IIFL Securities. “Members of the promoter and promoter group of the company have indicated their intention to participate in the proposed buyback,” it said.
However, the IT major has not yet announced the record date, timeline, and other details of the offer. As of now, Wipro is currently conducting an e-voting of shareholders to seek approval for the buyback. The outcome would be declared on June 3, following which the company will release the timeline of the buyback offer.
After completing the share buyback, it would have around $1.5bn of cash, said Yes Securities, which remains neutral on the stock with a target price of Rs 413 apiece.
What do market experts say?
Analysts at ICICI Securities believe that the acceptance ratio in the share buyback could be as high as 60 per cent or even higher, considering almost 100 per cent acceptance ratio seen for small investors in the last buyback offer in 2020.
“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 assumption of 60 per cent acceptance ratio. We do believe that acceptance ratio is likely to be north of 60 per cent, considering almost 100 per cent acceptance ratio seen for small investors in the last buyback offer in 2020.”, ICICI Securities said in a note
Emkay Global Financial Services has also recommended clients buy Wipro at the current market price and tender at Rs 445 in the offer period. “We expect acceptance ratio to be between 10-15 per cent (non-retail) considering 25-50 per cent tendering by large shareholders,” the brokerage said.
Wipro’s previous buyback was worth Rs 9,500 crore and was carried between December 29, 2020, to January 11, 2021.
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