Wipro hits new high, trades close to buyback price of Rs 400

Analysts believe cultural shift and growth focus was long overdue in Wipro and see bold management initiatives translating into large deal wins for the company

Shares of Wipro hit a new high of Rs 390, up 2 per cent, on the BSE on Tuesday, and were trading close to the share buyback price of Rs 400 per share.

The IT services major's share buyback programme commenced from today, December 29 and will close on January 11, 2021. In November, shareholders had approved the buyback plan for purchase of up to 237.5 million equity shares at Rs 400 per share, aggregating to an amount of up to Rs 9,500 crore.

The company will buy back share from all the eligible shareholders of the company as on the record date on a proportionate basis, through the tender offer. The stock already turned ex-date for share buyback on December 10, 2020.

Wipro said the buyback is being undertaken by the Company to return surplus funds to the Equity Shareholders, which are over and above its ordinary capital requirements and in excess of any current investment plans, in an expedient, effective and cost efficient manner. The Buyback would help in improving financial ratios like earnings per share and return on equity, by reducing the equity base of the Company, it said.

Meanwhile, Wipro, on Monday, after market hours announced that the board of directors of the company is scheduled to meet on January 13, 2021 to consider audited financial results of the company for the quarter ended December 31, 2020 (Q3). The board will also consider the declaration of interim dividend, if any, for the financial year 2020-21.

Since October 13, post July-September quarter (Q2FY21) results, the stock of Wipro underperformed the market by gaining 4 per cent, as compared to 17 per cent rise in the S&P BSE Sensex.

In a seasonally soft quarter, ICICI Securities expect Indian IT to deliver strong sequential revenue growth led by fewer-than-usual furloughs and residual recovery from Covid-19 decline over H1CY20.

“Over the previous 1-2 months, multiple tier-I firms announced IT captive takeover deals (e.g. Wipro - Metro AG, TCS - Deutsche bank / Pramerica, Infosys - Daimler). On the back of these, reported deal win TCV may be very strong and should also translate into an upgrade in the revenue outlook for Q4FY21 / FY22,” analysts at the brokerage firm said in IT Q3FY21 preview.

Analysts at Prabhudas Lilladher have ‘buy’ rating on Wipro with target price of Rs 415 per share as the brokerage firm believes that cultural shift and growth focus was long overdue in Wipro and we see bold management initiatives translating into large deal wins for Wipro, it said.

At 10:55 am, Wipro was trading 1 per cent higher at Rs 386.65 on the BSE, as compared to 0.25 per cent rise in the S&P BSE Sensex. The trading volumes increased 1.5 times with a combined 8.2 million equity shares were changing hands on the counter on the NSE and BSE.