- Proposed buyback estimated at Rs 15,500 crore, price around Rs 240 per share
- Morgan Stanley expects a $2 billion buyback, about 8.5% of market capitalization
- Wipro's stock has historically outperformed post-buyback announcements
Wipro Ltd.'s board will consider a share buyback on April 16 alongside its fourth-quarter results, marking its first such move in three years and the first since new buyback rules took effect on April 1.
The proposed repurchase could be around Rs 15,500 crore, based on past trends, with an estimated price of about Rs 240 per share, implying a premium of Rs 37 per share, according to available estimates viewed by NDTV Profit.
The move comes as the company holds a cash balance of Rs 57,394 crore as of the third quarter, the highest among the top five IT firms. Wipro has also committed to distribute more than 70% of its net income to shareholders between FY26 and FY28.
Buyback Trigger
Brokerages had identified Wipro as a key candidate for a buyback. Morgan Stanley maintained an "Underweight" rating with a target price of Rs 242 and said a buyback had been anticipated by the market.
"A potential buyback has been a move anticipated by the market," Morgan Stanley said.
The brokerage estimates a buyback of about $2 billion, or roughly 8.5% of the company's current market capitalisation.
Past Trends
Wipro's earlier buybacks were carried out at premiums ranging between 16% and 19% to the market price. Based on the historical average premium of about 18%, current estimates place the likely buyback price near Rs 240 per share.
The company last conducted a buyback in April 2023, with a size of Rs 12,000 crore at a price of Rs 223 per share and a premium of 18%. Earlier buybacks in October 2020 and April 2019 were priced at Rs 200 and Rs 163 per share, with premiums of 19% and 16%, respectively.
Cash deployed for these buybacks ranged between 23.1% and 29.9% of the company's cash balance at the time.
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Market Response
Morgan Stanley said Wipro's stock has historically reacted to buyback announcements.
"During the past five buybacks, Wipro has outperformed the Sensex post a formal buyback announcement in four out of five instances over one week, and in three out of five instances over one month," the brokerage said.
It added that the share price could see a short-term reaction following any announcement, but investor focus is likely to return to the company's fundamentals.
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