Wipro Shares In Focus: Is Buyback On Cards?

Brokerage firm CLSA, in its latest note, said Wipro Ltd.'s shares might witness a rally if a buyback is announced. The buyback exercise, if considered and approved by the IT giant's board, will be its first since 2023 and third in the last five years.

The buyback could be a fresh trigger to Wipro's stock, currently priced at a six-month low of Rs 265.

Since the last buyback in 2023, Wipro shares have gained by about 35%. The speculations around a fresh offer will give a boost of confidence to the existing shareholders.

The company’s commentary during Q3 concall unveiled plans to increase its payout percentage over 70% or above of the net income between fiscal years 2026 and 2028.

While the payout framework is currently structured over a three-year cycle, the company has not ruled out the possibility of transitioning to a more consistent and annualised model in the future.

As of fiscal 2025, the company has a net income of Rs 13,165 crore, with the cash and cash equivalent standing at Rs 12,187 crore.

Based on the historic data and NDTV Profit's estimate, the buyback might see a premium between 15-20%, and the buyback price per share could be between Rs 300 to Rs 315 per share.

Wipro last conducted a buyback in 2023, offering shares at Rs 445 apiece in a Rs 12,000-crore tender offer. That move saw the company repurchase 4.91% of its total equity.

The company's stock had rallied nearly 10% following the announcement. The premium offered at that time was around 15.38%, with the retail acceptance ratio touching 78%.

Before that, in 2020, Wipro executed another Rs 9,500 crore buyback at Rs 400 per share. The acceptance ratio for retail investors was 100%.

The stock had then surged nearly 19% post-announcement. Interestingly, that offer carried a premium of around 40% over the prevailing market price.

While Wipro has not made any formal announcement yet, analysts and investors are watching closely. Given the company’s past actions and strong balance sheet, another buyback could not only reward shareholders but also provide short-term momentum to the stock.

Shares of Wipro on Thursday settled 1.35 higher at Rs 265 apiece on the NSE, compared to a flat close for the benchmark Nifty 50. The scrip has risen by nearly 7% over the past 12 months, but has slipped by over 11% on a year-to-date basis.

Nine among the 45 analysts tracking the stock have a 'buy' rating, 16 recommend 'hold' and 21 recommend 'sell', according to Bloomberg data. The average of 12-month analysts' price target suggests a potential downside of 6.9%.