Wipro may opt for up to $1.2 billion share buyback

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Bengaluru, Jan 3: The stock markets and some analysts expect Wipro to announce another buyback of shares this quarter, subject to regulatory approval and the National Company Law Tribunal’s (NCLT) decision on the merger of four of its businesses with the tech major.
The NCLT is looking at the company’s proposal to merge Wipro Technologies Austria, Wipro Information Technology Austria, NewLogic Technologies SARL and Appirio India Cloud Solutions with itself. If the NCLT’s approval comes through, the company might consider a proposal to buy back shares worth $1-1.2 billion in the Jan-March quarter, sources said. The buyback is expected to be at a 20-25% premium to the prevailing share price. Like Infosys, Wipro is coming off the one-year moratorium for a share buyback. A buyback can be done only once in 12 months, and Wipro last did it in November-December 2017.
When TOI contacted Wipro, the company said, “We have an articulated payout policy. Currently, there is no buyback proposal under active consideration. The board evaluates our approach towards payouts on an ongoing basis. We do not have any additional comment at this point in time.”
Wipro’s last buyback was for shares worth Rs 11,000 crore ($1.7 billion). Each share was priced at Rs
320. The Azim Premji Trust and other promoter entities sold 2.73% of the stake for over Rs 5,700 crore. At the company’s last AGM in July, Premji said the company has committed to return 45-50% of its net profit to its shareholders.
Peter Bendor-Samuel, CEO of IT advisory Everest Group, said, “Wipro has sold off underperforming assets in its infrastructure business, worked through some poor contracts and is looking to follow the path other Indian IT firms have trodden by returning cash to shareholders through a share repurchase programme,” he said.
Bendor-Samuel said one needs to watch closely to see if Wipro pulls back from its acquisition strategy. Digital assets are getting hard to find and are becoming very expensive, he said. “Likely, Wipro feels that for this year, it will be opportunistic in buying new assets but will still have a significant surplus of cash which can be productively returned to shareholders through a share buyback,” he said.