IT major Wipro has recently announced its fifth buyback in history, with a record date set for June 16, 2023. The buyback, valued at Rs 12,000 crore, has been approved at a minimum price of Rs 445 per share, representing a 10 percent premium over the current market price of Rs 405. Analyzing the previous four buybacks conducted by Wipro in 2016, 2017, 2019, and 2020, provides valuable insights for investors considering participation in the upcoming buyback.
Wipro Buyback Historical Analysis
Examining the historical data of Wipro’s previous buybacks, it becomes evident that the stock’s performance during the buyback period varied. Out of the four buybacks, three instances witnessed a correction in the stock price, while only one resulted in a modest 1.7 percent gain in 2019.
In 2016, Wipro’s share price declined by 11.4 percent from the announcement date to the record date. Similarly, the stock experienced a correction of 3.6 percent in 2017 and 6.0 percent in 2020. However, in 2019, the stock closed 1.7 percent higher during the buyback period.
Wipro 2016 Buyback
- Announcement Date: April 20, 2016
- Share Price on Announcement Date: Rs 225.5
- Record Date: May 6, 2016
- Share Price on Record Date: Rs 199.9
- Stock Return: -11.4%
Wipro 2017 Buyback
- Announcement Date: September 1, 2017
- Share Price on Announcement Date: Rs 222.3
- Record Date: September 15, 2017
- Share Price on Record Date: Rs 214.3
- Stock Return: -3.6%
Wipro 2019 Buyback
- Announcement Date: April 16, 2019
- Share Price on Announcement Date: Rs 280.9
- Record Date: June 21, 2019
- Share Price on Record Date: Rs 285.9
- Stock Return: 1.8%
Wipro 2020 Buyback
- Announcement Date: October 13, 2020
- Share Price on Announcement Date: Rs 376
- Record Date: December 11, 2020
- Share Price on Record Date: Rs 353.5
- Stock Return: -6.0%
Wipro 2023 BuyBack
- Announcement Date: 27th April 2023
- Share Price on Announcement Date: Rs 374.4
- Record Date: June 16th, 2023
- Wipro Share Price Prediction on Record Date: Rs 415 to Rs. 425
- Expected Stock Return: ??
Wipro Buyback on June 16th 2023- What should Investors Do?
Considering the upcoming buyback, Wipro investors must evaluate several factors before making an informed decision.
Here are a few key considerations:
- Past Performance: Analyzing the historical data of Wipro’s buybacks highlights the volatility and uncertainty associated with the stock’s performance during these periods. Investors should weigh the likelihood of potential price corrections against the historical gains seen in 2019.
- Acceptance Ratio: The size of the buyback offer, 4.91 percent of the total equity shares, indicates a reasonable acceptance ratio in the retail category. Investors should assess the likelihood of their shares being accepted in the buyback based on their holding size and the total number of shares tendered.
- Wipro’s Financial Health: Evaluating Wipro’s financial health, growth prospects, and market position is crucial. Investors should assess the company’s fundamentals, future plans, and industry trends to determine its long-term potential. Wipro’s latest financial stats (earnings) for the quarter ended March 31, 2023 shows positive financial health.
Consolidated revenue: ₹23,190.30 crore (up 11.17% YoY)
Standalone revenue: ₹17,477.30 crore (up 12.14% YoY)
Net profit: ₹3,079 crore (down 0.8% YoY)
Earnings per share (EPS): ₹10.46 (down 0.8% YoY) - Individual Investment Objectives and Risk Tolerance: Investors must align their participation in the buyback with their specific investment goals and risk appetite. Those seeking short-term gains may find the buyback attractive, while long-term investors might prioritize other factors such as dividend income or capital appreciation.
Wipro Buyback: What I am personally doing?
Based on the past performance, it looks like it is a good call to participate in the Wipro shares Buyback. Wipro stock price may plummet post the recorded date. Since the price you are getting is higher from the current price by more than 10%, it is better to sell and then buy back on the recorded date.
While the previous buybacks indicate a mixed track record, majorly declining – 3 out of 4 times loss, past performance does not guarantee future results.
Seeking advice from a financial advisor or conducting further research can provide valuable insights to aid investors in making an informed decision regarding participation in Wipro’s upcoming buyback.
I, personally might apply in the Wipro buyback, hoping it gets accepted. If it gets accepted, I might buyback Wipro, as I look to hold this IT stock for a very long time.
What did we learn?
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