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Wipro to kickstart its Rs 12,000-crore buyback on June 16

The information technology services firm will buy back 26.96 crore shares, equivalent to a 4.91% stake in the company, at Rs 445 per share, according to an exchange filing on June 2. That’s nearly a 10% premium over Friday’s close.

Experts, however, believe a dividend payout would have been better.

“IT companies generate a lot of cash. They should ideally give dividends instead of calling for a share buyback,” said Mahantesh Sabarad, an independent equities analyst. “Some investors may just miss the bus, simply because they weren’t aware of the buyback”.

Wipro’s challenges lie in its operational profitability, which lags behind that of peers Tata Consultancy Services Ltd. and Infosys Ltd., and the buyback may just help in shoring up its RoCE, Sabarad said.

2016 4.00 1.62 625 2,500
2017 34.37 7.06 320 11,000
2019 32.30 5.35 325 10,500
2020 23.75 4.16 400 9,500
2023 26.96 4.91 445 12,000

The buyback, the largest in at least seven years, comes after Wipro’s net profit dipped 7.16% year-on-year to Rs 11,366.50 crore in the fiscal ended March 31, 2023.

Wipro expects revenue from its IT services business, including the India State Run Enterprise segment, to be in the range of $2,753 million to $2,811 million. This translates to sequential guidance of -3.0% to -1.0% in constant currency terms. Bloomberg

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