- Wipro shares rose nearly 3% after announcing a buyback plan
- The proposed buyback could total around Rs 15,500 crore at Rs 240 per share
- Wipro holds Rs 57,394 crore in cash, highest among top five IT companies
Shares of Wipro Ltd. rose nearly 3% during early trade on Friday after the board announced it 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.
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%.
Wipro Share Price Movement
Wipro share price gained as much as 2.9% on the NSE, compared to a 0.7% surge in the benchmark Nifty 50. The stock is down 22% year-to-date and 13% on a 12-month basis.
The total traded volume so far in the day stood at 9.8 times its 30-day average. The relative strength index was at 57.
Twelve out of the 46 analysts tracking Wipro have a 'buy' rating on the stock, 19 recommend a 'hold' and 15 suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets is Rs 225, which implies a potential upside of 8%.
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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