Wipro shares spiked today after the company announced a mega share buyback plan worth up to Rs 11,000 crore, the second biggest share repurchase by an Indian company in at least 18 years, following Tata Consultancy Services’ Rs 16,000 crore programme in May. Wipro Ltd shares rose as much as 8.2% to Rs 291 on BSE in the morning trade on Friday.
However, analysts seem not too impressed with the company’s future prospects, with the research and brokerage firm Morgan Stanley maintaining its ‘underweight’ rating on Wipro shares with a target price of Rs 240, which implies a downside of more than 15% from today’s trading prices. Wipro fiscal first quarter results were better than expected but the guidance for the the next quarter is soft. Though, Morgan Stanley added that Wipro has surprised on earnings for the last two consecutive quarters.
Wipro on Thursday announced a proposal to buy back 34.37 crore shares of the company for an amount of Rs 11,000 crore. Last year, in June 2016, the Bengaluru-based company had completed a buyback of shares worth Rs 2,500 crore. The Wipro offer represents 7.06% of the fully paid up equity capital of the company. Shares will be bought back at Rs 320 apiece, which is nearly 19% higher than the stock’s closing price on BSE on Thursday of Rs 269.
Wipro joins other IT majors like HCL Technologies, Tata Consultancy Services (TCS) and Mphasis which bought back their shares in 2017. Among the other firms that have bought back shares are Vardhaman Textiles, KPR Mills, SKF India, Jagran Prakashan and Gujarat Apollo Industries.
Wipro’s is the second-biggest buyback offer in 18 years. TCS’s buyback has been the biggest share repurchase offer during this period. TCS completed its repurchase of shares worth Rs 16,000 crore on May 2017. In 2012, Reliance Industries bought back shares for an amount of Rs 10,440 crore.