Wipro Limited, India’s third-largest Information Technology company by revenues, has denied reports that its promoters are at an early stage of evaluating the sale of a part or the whole business. The IT major has termed the reports which made the said claim as ‘baseless and malicious’. Founder and chairman Azim Premji and his family own just over 73 percent in the company. The stock price of the company was under pressure during early trade but gained around a percent after the company issued the denial. The stock closed up 0.66% at Rs 555.60 on the BSE.
The said report had claimed, quoting an unnamed source in the senior banking industry, that the promoters of Wipro are in the early stages of evaluating the sale of the company or some of its units and have approached investment banks to arrive at a fair value. The company has said that there is ‘no truth to unsubstantiated rumours’ of a stake sale consideration by the promoters.
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Wipro is sitting on cash pile of Rs 34,474 crore as per a presentation it made to investors and its board had announced a 1:1 bonus in April. But not all seems rosy, as the IT major has struggled to grow at a robust pace in the last five years, with the company reporting only mid-single digit growth for the last five years despite its cash generation being quite strong. For the Financial Year 2017, the company’s operating cash flows were at 109 percent of the net income. The company had announced a 1:1 bonus in April.
The IT industry, on the whole, has been struggling with headwinds in their traditional operating environments. Large IT companies have undertaken stringent performance appraisal measures this year to remove the non-performers. Infosys is estimated to have laid off around 1,000 people while it is 6,000 for Cognizant, 350 for Wipro and 1,500 for Tech Mahindra. Including other companies such as Capgemini and DXC Technologies, the total number could reach 20,000, while the industry body NASSCOM had stated that the industry has been a net hirer of 1.5 lakh people every year.