Wipro share buyback record date today. What analysts recommend to retail investors

Wipro shares will turn ex-share buyback on Friday. Today is also the record date for the same. Investors who held Wipro shares on Thursday would be eligible to participate in the share buyback. Analysts largely sees acceptance ratio in the 40-60 per cent range. To recall, the last buyback by Wipro saw almost 100 per cent acceptance.  Retail acceptance in fact stood in the range of 50-100 per cent in the last four share  buybacks.

The Thierry Delaporte-led IT firm is looking to buy back up to 269,662,921 shares of face value Rs 2 each on a proportionate basis, by way of a tender offer, at a price of Rs 445 per equity shares. A total of 15 per cent of the shares in the buyback are reserved for retail investors -- those who own less than Rs 2 lakh worth shares. Wipro promoters would be participating in the issue and could tender up to 3,91,74,17,716 shares.       

On Thursday, Wipro shares closed at Rs 388.95 on BSE. At this price, the buyback price offers a 14.41 per cent  upside potential. The final number of shares the company will purchase from each shareholder will be based on the total number of shares tendered. It would depend on acceptance ratio, which suggests the percentage of tendered shares that will be accepted for repurchase. Accordingly, the company may not purchase all of the shares tendered by a holder of equity shares.

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Anubhuti Mishra, Equity Research Analyst at Swastika Investmart noted that June 15 was the last date to buy Wipro's shares to be eligible to participate in the company's share buyback.  "The share is currently trading around Rs 389, so as of today, the calculated premium is more than 14 per cent, so we will advise retail investors you to take part in this buyback. Furthermore, we anticipate an acceptance ratio of around 40 per cent, which has the potential to increase to 60 per cent. This expectation is supported by the fact that retail investors experienced an almost 100 per cent acceptance ratio in the previous buyback offer in 2020," Mishra said.

Wipro is yet to announce the timeline for the buyback. but has reserved 15 per cent, or 4 crore shares, for retail investors, amounting Rs 1,800 crore.

Aamar Deo Singh, Head Advisory at Angel One anticipated the acceptance ratio to reach 40 per cent for the retail segment. He said the potential returns overall appear to be favourable. "However, it is important to keep in mind that share price performance for Wipro has changed in the past following share buybacks."

The Rs 12,000 crore share buyback is Wipro's biggest in terms of buyback size. If one includes the previous four share buybacks that the Bengaluru-based IT firm announced since 2016, the total buyback announced by the Azim Premji founded company stands at Rs 45,500 crore in eight years. The Rs 12,000 crore IPO would represent 4.91 per cent of total number of equity shares.

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While the IT firm's guidance for June quarter was dismal, the stock has been holding up, gaining about 5 per cent since the Thierry Delaporte-led company announced the Rs 12,000 crore share buyback.

Foreign brokerage JPMorgan believes Wipro’s weak June quarter guidance highlights the challenging macro environment that will lead to a sharp slowdown in growth in FY24E and keep it under pressure in the absence of operating leverage.

"Wipro’s higher consulting exposure keeps it at a higher risk of slowdown than peers. It warned while suggesting a target of Rs 350 in a note published on June 14.

Wipro is expecting June quarter revenue from its IT Services business including India State Run Enterprise (ISRE) segment to be in the range of $2,753 million to $2,811 million. This translates to sequential guidance of minus 3 per cent to 1 per cent in constant currency terms.

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