Share prices of Wipro rose by 2.54% on Thursday after the company said its shareholders have approved its Rs 11,000-crore buyback proposal. The stock hit a 16-month high and was the biggest gainer amongst Sensex stocks. The company has set September 15, 2017, as the record date to decide eligible shareholders. The stock ended 2.54% higher at Rs 299.05 on BSE. During the day, it went up by 2.86 per cent to Rs 300 – its 52-week high. On NSE, shares of the company gained 2.71% to close at Rs 299.10. The stock was the biggest gainer among the bluechips on both the key indices. The company’s market valuation also went up by Rs 3,616.23 crore to Rs 1,45,537.23 crore.
So far in 2017, companies having bought back nearly Rs 30,000 crore worth of shares. Should the buybacks of Wipro and Infosys be successful, India Inc would have completed close to Rs 54,000 crore in 2017. This would be the highest amount ever raised via buybacks; in 2016, buybacks worth Rs 27,000 crore were completed. Equities have hit new highs; the benchmark Sensex has put on 19.17 % between January and now. At the current levels of 31,730.49, the gauge trades at a price -earnings multiple of over 18.68 times one-year estimated forward earnings. This is a big premium to the historical multiples. Much of the rally, market watchers say, has been driven by liquidity.
Wipro had announced the proposal to buy back 34.37 crore shares of the company in July. The Wipro offer represents 7.06% of the fully paid up equity capital of the company. Shares will be bought back at Rs 320 a piece, which is nearly 6.54% higher than the stock’s closing price on BSE on Thursday. As of June 2017, the company has cash and cash equivalents worth Rs 37, 203.50 crore. Earlier in June 2016, the Bengaluru-based company had completed a buyback of shares worth Rs 2,500 crore.
Of the 52 brokerages who track Wipro’s stock, seven have given the stock a buy rating, 23 have a hold rating while 22 have a sell rating on the stock.
A total of 1.11 crore shares were traded on BSE and NSE on Thursday. This is three times more than the six-month daily average volume of 37.03 lakh shares. On August 19, the board of Infosys had approved a proposal to buyback shares worth Rs 13,000 crore. TCS completed its repurchase of shares worth Rs 16,000 crore in May 2017. TCS’s buyback has been the biggest share repurchase offer in 18 years. Mphasis completed the buyback of shares worth Rs 1,103 crore in May 2017.In June, HCL repurchased shares worth Rs 3,500 crore.