Wipro Buyback 2020

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading global information technology, consulting and business process services company. They harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, a strong commitment to sustainability and good corporate citizenship, we have over 160,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Buy Back Offer Deal:

Buyback Type: Tender offer
Buyback Offer Amount: ₹ 9500 Crores
Date of Board Meeting approving the proposal: Oct 13 2020
Date of Public Announcement: Oct 13 2020
Buyback Offer Size: 4.16%
Buyback Number of Shares: 23,75,00,000
Price Type: Tender Offer
FV: 2
Buyback Price: ₹ 400 Per Equity Share

Details of Buyback:

The Board of Directors of Wipro Limited (the "Company") at its 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) (hereinafter referred to as the "Buyback Size"), being 4.16% of the total paid-up equity share capital, at a price of Rs. 400/- (Rupees Four Hundred only) per equity share (hereinafter the "Buyback Price" and such buyback, the "Buyback").

Salient financial parameters:

Particulars(Cr) Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Sales 46,951 51,244 55,448 54,487 59,019 61,138
Expenses 36,652 40,448 44,128 44,100 47,406 48,795
Operating Profit 10,299 10,796 11,321 10,387 11,613 12,342
OPM % 22% 21% 20% 19% 20% 20%
Other Income 2,450 2,752 2,623 2,550 2,614 2,728
Interest 350 558 594 583 738 733
Depreciation 1,175 1,496 2,310 2,112 1,947 2,086
Profit before tax 11,224 11,494 11,039 10,242 11,542 12,252
Tax % 22% 22% 23% 22% 22% 20%
Net Profit 8,661 8,908 8,493 8,003 9,004 9,722
EPS in Rs 12.26 13.52 13.1 13.27 14.92 17.02
Dividend Payout % 34% 17% 6% 6% 7% 6%
Source: Screener

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of Wipro Buyback 2020 in demat or physical form as on record date [Not announced] 2. Once you have shares in demat, you can participate in the buyback process which is opening from [Not Announced], by selling your shares through your broker on NSE or BSE. 3. Then on [Not Announced] the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 500 Shares at CMP of Rs.375( 2,00,000/375=500)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 187500 187500 187500 187500
No. of Shares buyback 165 250 375 500
BuyBack Profit 4125 6250 9375 12500
Profit 2.20% 3.33% 5.00% 6.67%

Recommendation:

Review and Recommendation of Wipro Buyback from our IZ team is: 7/10 1-5: Fair 5-7: Good 7-10: Excellent. [Expected ER = 72%]

    bought 250 shares at 342 for buyback lets see how it goes will keep you guys updated.

    *Motilal Oswal Financial Services on Wipro buyback:*

    Retail investors, looking for a short-term opportunity, can buy the shares of Wipro (up to the value of Rs 2 lakh – as on the record date) from the open market and tender them in the buyback offer.

    “Based on the last two buybacks of Wipro and very low retail shareholding, we expect the acceptance ratio to remain high in the range of 40-60 percent which could give a potential return of 7-11 percent (pre-tax) with a time frame of 2-3 months (assuming one is able to sell the remaining un-tendered shares at the current levels of about Rs 340),” Motilal Oswal said.​

    one can start accumulating Wipro from here @340 for buyback purposes. and add slowly till 325.
    price is 17% lower than BB price of 400.

    Last time the buyback happened, the acceptance ratio was 52% I think. This time the size is lesser.
    I do not expect the acceptance ratio to cross 50% this time as well. The price at which the in accwpted shares were sold was abt 10-15% below. So for safety ( and wipro takes longer to buyback so money remains stuck longer), I think even 350 is not a good price to buyin, unless one is extremely bullish otherwise on wipro. 325 range is safer

      Can you explain how the accepted shares were sold at a price lower than the fixed buyback price? As it was a tender offer, so the price fixed by the co, would be the price at which shares would be bought back, right?

        YES, the shares which are not taken by the company have to be sold into the open market after the buyback finished. he is talking about that shares.

      Ayush. That was the autocorrect error.
      I meant unaccepted shares were sold in the mkt at that price

      Ya,
      U are right..last time the acceptance ratio was 52%

      And this time the buyback size is also less as compared to previous one!

    Promoters are also going to participate in buyback. In view of this , what is expected entitlement ration for retail investors.