IT behemoth Wipro has slated June 16 as the record date for its Rs 12,000 crore buyback plan. The record date will determine the entitlement and names of shareholders that will be eligible to participate in the share buyback. The company has set a floor price of Rs 445 per share, which is 10% higher than its current trading price. This is the fifth buyback announced by the IT major over the past seven years. Wipro will buy up to 26.97 crore shares of face value Rs 2 from every shareholder.

Buyback History of Wipro

 

Wipro launched a buyback of Rs 9,500 crore in the year 2020 and bought 23.75 crore of its shares at Rs 400 per share. Prior to this, the company announced three share buybacks in the yar 2019, 2017 and 2016.

Should shareholders tender their shares in buyback?

 

According to the analysis unanimous advice, Investors should tender their shares. As per A R Ramachandran, co-founder & trainer at Tips2trade, Wipro’s current underperformance gives short-term investors a chance to sell their shares and book profits. He did, however, add that Wipro stock should be held onto by long-term investors. Short-term holders should sell because a price correction to the support level of 390 seems overdue. However, long-term investors should hold because Wipro could aim for Rs. 485–560 this year.

However, due to a number of difficulties, Wipro is currently facing, Manish Chowdhury, Head of Research at Stoxbox, advised shareholders to tender their shares in the buyback programme. These difficulties include senior management departures, poor financial performance and guidance, inferior operational effectiveness and profitability to competitors, and the impact of the business’s recent aggressive acquisition strategy that has yet to be felt.

Furthermore, he added that the lessons learned from TCS and BirlaSoft’s previous buybacks do not paint a very positive picture, as both companies are still trading substantially below their buyback price. We advise investors to adopt a wait-and-watch approach for at least 1-2 quarters before committing to the sector, as the IT sector is currently engulfed in a storm as a result of the deteriorating global economic outlook.