The buyback will be conducted through the tender offer route on July 16, 2023
07-Jun-2023 •Angel Mohan Bishnoi
Wipro , India's third largest software exporter, has announced that it will commence a Rs 12,000 crore share buyback on July 16, 2023. It plans to purchase nearly 27 crore shares for a maximum of Rs 445 per share.
The company will conduct the buyback via a tender offer route, wherein existing shareholders can opt to retain or sell their shares to the company.
What it means for the company
This will be Wipro's fifth buyback since 2016. After this buyback, the company's outstanding shares will fall from 549 crore to 522 crore. The proposed buyback will cost the company around 27 per cent of its total cash balance of Rs 43,111 crore.
| Year | Number of shares (in cr) | Purchase price (₹) |
|---|---|---|
| 2021 | 23.75 | 400 |
| 2019 | 32.30 | 325 |
| 2017 | 34.37 | 320 |
| 2016 | 3.99 | 625 |
The buyback stands to boost the company's per-share metrics (earnings per share, price-to-earnings ratio, etc.) as the number of outstanding shares will decline.
What it means for investors
Companies often use tender offer buybacks to reward their shareholders. As the price offered by the company in buybacks is higher than the market price of the share, shareholders can exit their holdings at a premium. At the same time, shareholders who decide to retain their shares get rights over a larger chunk of the company's earnings pie as the buyback reduces the number of outstanding shares.
The buyback offer of Rs 445 per share is at a premium of around 10 per cent over its closing price (Rs 404.80) as of June 2, 2023 (when the buyback date was set).
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