Wipro Buyback approved in its Board meeting held on October 13, 2020 has approved a proposal to buyback up to 23,75,00,000 equity shares (Twenty Three Crores Seventy Five Lakhs only) of the Company for an aggregate amount not exceeding Rs. 95,00,00,00,000/- (Rupees Nine Thousand Five Hundred Crores only) at a price of Rs. 400/-. Wipro Buyback coresponds to 4.16% of the total paid-up equity share capital of tje company and is on a proportionate basis through the tender route.

See List of all Forthcoming and Recent Buybacks

Wipro Buyback: Updates
Wipro Buyback 2020 : Info
2020
2018
Buyback TypeTenderTender
Announcement 07-10-2010-04-19
MP befo this336281
Board meet13-10-2016-04-19
MP befo BM375.5290
Buy Back Price400325
% Premium on MP6.52%12.07%
BuyBack Size- Rs. Cr9500#REF!
BuyBack Size- Shares237,500,000323,076,923
Tot No.of shares5,714,966,3556,033,935,388
% Buyback4.16%5.35%
Equity Capital- cr1,142.991,206.79
FV of Share in Rs.22
Record Date21-06-19
Buy Back Issue date14-08: 28-08-19
Shares reserved- Retail 35,625,00048,461,538
Shares on RD 115351903
Buyback Entitlement42.01%
Retail bidders (tendered)66,280
Shares Tendered 90601525
Tendering ratio78.54%
Retail response186.96%
Aceeptance %53.5%
Wipro Buyback: Broad Estimate of Aceeptance % range

1) Few additional purchase  of Shares by existing shareholders with eye on earning additional returns through buyback. 2) Purchase of  few shares by arbitrage investors. 3) Feedback from last two buybacks.

Based on approximations indicated above, the entitlement ratio for Wipro Buyback could have an acceptance ratio 60-75%. However a fall in WIPRO stock price over a prolonged period could lead to more people buying it for arbitrage and could push down the acceptance to 50-55% zone.Thus acceptance ratio is highly dependent on stock price movement till end of buyback. In last buyback the acceptace ratio was 52% and before that it was almost 100%.

Cross Tabulation of Estimated Returns: Wipro Buyback

The absolute returns/Loss that may accrue to an Investors/Arbitrage trader are a function of Percentage Acceptance Ratio and Price Post Buyback.  Investors may kept in mind that stock markets are quite volatile at this  juncture and there are many political and other uncertainties related to international markets. We have depicted  estimated Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.

Shares Bought
500
Nos.
Buyback Price400
Price (Live)347.0
Investment (Rs.)173500
Absolute Returns %
MP Aft Buybk
Acceptance %290300310
50%-0.58%0.86%2.31%
60%2.59%3.75%4.90%
70%5.76%6.63%7.49%
80%8.93%9.51%10.09%

This post is purely for informative and educational purpose and is in no way suggestive of taking any position in the counter. Profit or Loss in  any buy sell operation in stocks is associated with significant risk of capital loss. For more on Buyback Benefits and other issues please refer the earlier Posts
 Buyback of Shares: A Primer for Retail Investors

About Wipro :
  • Wipro is a leading information technology, consulting and business process services company.
  • Wipro delivers IT Services, Business and Technology Consulting, IT Outsourcing and System Integration services & solution.
  • Wipro is one of the top three players in the Indian Information Technology (IT) industry— It has s diversified revenue streams with healthy revenue composition across various services lines and domains; and strategic alliances spread across geographies.
  • With a track record of over 25 years in IT Services, Wipro is focused entirely on the global Information Technology business.
  • Wipro is listed on National Stock Exchange and Bombay Stock Exchange in India and New York Stock Exchange.
  • Wipro operates in over 50 countries serving clients across 6 continents and the company has a dedicated workforce of over 160,000.
  • Wipro’s Service Offerings include :
    • Data, Analytics & AI Applications
    • Digital Operations and Platforms
    • Consulting
    • Infrastructure Services
    • Cybersecurity
Wipro Buyback: Summary of Financials,  Stock Price Trend
Market Cap- Rs. Cr2,14,884
CMP in Rs.376
Revenue – cr. (TTM)61,241
Net profit-cr (TTM)9638.1
Equity Share Capital1143
Face Value2
EPS TTM16.86
Price / Earning (PE)22.30
Book Value96.8
Price / BV0.10
ROCE %19.90%
ROE  %17.50%
Sales 3 yr CAGR3.31%
Dividend Yield0.15%
Debt / Equity Ratio0.02
52 week  H/L ₹ 382 / 159

Wipro Q2 FY21 Peformance

  • Gross Revenue was ₹151.1 billion ($2.1 billion) ), an increase of 1.4% QoQ and a decrease of 0.1% YoY
  • IT Services Segment Revenue was at $1,992.4 million, an increase of 3.7% QoQ
  • Non-GAAP2 constant currency IT Services Segment Revenue increased by 2.0% QoQ
  • IT Services Operating Margin for the quarter was at 19.2%, an expansion of 0.2% QoQ and 1.1%YoY
  • Net Income for the quarter was ₹24.7 billion a decrease of 3.4% YoY
  • Earnings Per Share for the quarter was at ₹4.33 an increase of 0.7% YoY
  • Operating Cash Flow was at ₹44.1 billion which is 179.0% of Net Income

Assessment: Wipro Buyback

  • This is the third buyback from Wipro. In last buyback the acceptace ratio was 52% and before that it was almost 100%.
  • The proposed Buyback is subject to approval of shareholders by way of a special resolution through a postal ballot and could take 3-4 months.
  • Promoters have indicated their intention to participate in the proposed Buyback.
  • Outlook for the quarter ending December 31, 2020:Mangement expects Revenues from IT Services business to be in the range of $2,022 million to $2,062 million. This translates to a sequential growth of 1.5% to 3.5%.
  • There was a strong jump in cashflows in the quarter.
  • Wipro being in F&O, Wipro Buyback may offer a reasonable opportunity to arbitrage investors as such stocks exhibit relatively lower volatility post buyback and some investors can hedge their positions as well.
  • Wipro has run up considerably in last few days in expectation of buyback. One cannot rule out some pressure on the stock price in coming days.
  • From an arbitrage angle, due to considerable run up in market price, I would wait for some dip in prices. The movement in the stock price price in coming days will have a bearing on its acceptance ratio and returns. A good traction in stock price could lead to arbitrage investors exiting the stock and in such case the expected acceptance ratio could end up higher and even approach 100% . Any denial of such opportunity will bring down the rerturns due to low acceptance ratio and a lower price post buyback.
  • This is a large and moderate opportunity and if markets are not very volatile, investors should get an opportunity to enter the scrip and make modest retuirns.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk. Further the data in the post is prone to errors.