Amidst severe pressure on IT stocks, IT major Wipro said on Sunday it will consider a proposal to buy back equity shares at its board meeting to be held over April 26-27. The company did not specify in the regulatory filing whether the buyback would be conducted via the tender method or the stock-exchange route.
The Wipro stock closed Friday’s trading session at Rs 368 apiece on the Bombay Stock Exchange, up 1.42% over the previous close. The stock is trading close to its 52-week low of Rs 351.85. The 52-week high for the stock is Rs 542.90.
The estimated cash and bank balances on the books of the company were Rs 36,500 crore at the end of March, 2022.
The Bengaluru – headquartered firm last conducted a buy-back in December-2020–January, 2021 during which 237.5million equity shares were bought back at a price of ₹400 per equity share. The total amount utilized for the buybackas ₹9,500 crore. Promoter Azim Premji and promoter companies together tendered nearly 229 million shares worth ₹9,156 crore. Post the buyback, the promoters held a 73.04% stake in the company, about one % lower than the 74% held prior to the buyback. The promoters now hold 72.92%.
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The remaining stake of 26.96% stake is held by foreign investors, financial institutions and others.
IT stocks have been under pressure with analysts anticipating a slowdown in earnings growth in the wake of a possible recession in the US and worsening macro-econmic conditions. Verticals such as BFSI, to which Indian software services providers have a big exposure, are expected to see slowing spends. Late kast week, JP Morgan wrote the Q4FY23 results of TCS and Infosys had highlighted challenges in the BFSI, telecom, Hitech, manufacturing and retail verticals with clients ramping down, deferring and cancelling projects.
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Wipro reported a modest set of numbers in Q3FY23 with weak revenue growth that missed expectations and a sharp uptick in margins, materially ahead of estimates.Analysts noted that although the deal wins were strong, the company was unable to translate these into improved revenue growth.
In March, the Securities and Exchange Board (SEBI) notifies the new rules for buybacks. If the buyback is being carried out via the stock exchange route, a company shall not purchase more than 25% of the average daily trading volume (in value) of its shares or other specified securities in the ten trading days preceding the day in which such purchases are made. The regulator has decied to phase out buy-backs via the stock exchange route.