Key facts
- Wipro launched a Rs 15,000 crore share buyback on June 10.
- The offer price is Rs 250 per share, a premium to the current market price.
- The buyback is open until June 17 for shareholders of record on June 5.
- Retail investors are expected to achieve 7-8% returns on tendered shares.
- The main risk is the potential depreciation of unaccepted shares.
Wipro's significant Rs 15,000 crore share buyback program commenced on Thursday, June 10, offering eligible shareholders an opportunity to tender their shares at Rs 250 apiece. This price represents a substantial premium, approximately 40% higher than the prevailing market rate at the time of the announcement.
The buyback, which aims to repurchase up to 5.7% of the company's total paid-up share capital, will remain open until June 17. Eligibility for participation is determined by shareholding on the record date of June 5. Shareholders who acquired Wipro stock after this date are not eligible for this offer.
For small shareholders, defined as those holding shares valued below Rs 2 lakh as of the record date, the entitlement ratio is 11 equity shares for every 56 held. Shareholders in the general category have an entitlement ratio of 10 equity shares for every 197 held. Wipro's promoters and promoter groups have also indicated their intention to participate in the buyback.
Analysts suggest that retail investors, particularly those in the small shareholder category, could realize returns of approximately 7-8% on the shares accepted in the buyback. For instance, an investor tendering shares at Rs 250 could earn a profit of around Rs 52 to Rs 69 per accepted share compared to current market prices, depending on acceptance ratios which are estimated to be around 20-21% for the reserved category.
However, experts caution that the primary risk associated with this buyback opportunity lies in the unaccepted portion of shares. If Wipro's stock price declines post-buyback, especially within a bearish IT and broader market context, the residual holding could diminish the overall arbitrage return. Therefore, this is viewed as a tactical opportunity rather than a signal for a structural positive outlook on Wipro or the IT sector.