Indian IT giant Wipro is set to consider a proposal for a buyback of equity shares of the company this week. The board of directors will hold a two-day meeting to announce the fourth quarter results for FY23 and consider other key developments. The buyback announcement is expected to take place on the last day of the meeting, which is April 27.
In its regulatory filing on Sunday, Wipro said that “the Board of Directors of the Company will be considering a proposal to buyback equity shares of the Company and the matters necessary and incidental thereto, at its meeting scheduled to be held over April 26-27, 2023.” This would be the first buyback since January 2021.
The buyback is expected to improve the return on equity through the distribution of cash and improve earnings per share by reducing the equity base in the long term, thereby leading to a long-term increase in members’ value. The buyback also gives an opportunity to shareholders to increase their percentage of holding in the company.
Wipro’s last buyback, which took place between December 29, 2020, to January 11, 2021, was worth ₹9,500 crore. During this buyback, Wipro tendered 22,89,04,785 equity shares, accounting for 96.38% of the total buyback size, aggregating to ₹9,156 crore. Before this, Wipro had launched a buyback programme of ₹10,500 crore between August 14 to August 28 of 2019.
Any dividend announcement from Wipro will also be keenly watched during the two-day meeting since its peers, HCL Tech, TCS, and Infosys, have recommended dividends during their Q4 announcement day.
For Q4FY23, Motilal Oswal’s preview note said that Wipro’s growth should remain soft and within the management’s guidance provided in 3QFY23 due to slower revenue conversion and weakness in consulting. The brokerage expects margins to remain flat sequentially. Consulting should remain soft while clients continue to cut discretionary spending.
Wipro’s share price closed at ₹368 apiece, up by 1.42% on BSE, on Friday last week. The company’s m-cap is nearly ₹2.02 lakh crore by the end of April 21st.
In summary, Wipro is considering a buyback of equity shares, and the announcement is expected to be made on the last day of the two-day board meeting scheduled for April 26-27, 2023. The buyback is expected to improve the return on equity, and any dividend announcement will also be watched keenly. The company’s Q4FY23 growth is expected to remain soft, and consulting should remain weak, with clients cutting discretionary spending.
