Wipro, the Indian multinational corporation, recently announced a share repurchase plan. The company plans to buy back up to 23.75 crore shares, worth about ₹9,500 crore ($1.3 billion), from its shareholders. The move is part of Wipro’s capital allocation strategy to return surplus cash to its shareholders and boost investor confidence.
Share repurchase is a common strategy used by companies to boost shareholder value. When a company buys back its shares, it reduces the number of outstanding shares in the market, which increases the value of the remaining shares. This move also sends a positive signal to investors, indicating that the company believes its shares are undervalued and that it has confidence in its future growth prospects.
Wipro’s share repurchase plan is also a sign of the company’s strong financial position. The company had a cash and cash equivalent balance of ₹28,359 crore ($3.8 billion) as of December 31, 2021. Wipro’s cash reserves have been growing steadily, and the company has been looking for ways to put this money to work.
The share repurchase plan is also in line with Wipro’s commitment to returning cash to its shareholders. In January 2022, the company announced a dividend of ₹2 per share, amounting to a total payout of ₹4,938 crore ($667 million). The company also plans to increase its dividend payout ratio from the current 50% to 60% in the coming years.
The share repurchase plan is expected to benefit Wipro’s shareholders in multiple ways. Firstly, it will lead to an increase in earnings per share (EPS), as the number of outstanding shares will reduce. Secondly, it will help to support the stock price, as the reduced number of shares in the market will increase demand for the remaining shares. Thirdly, the share repurchase will provide shareholders with a cash windfall, as they will receive a premium on the repurchased shares.
Wipro’s share repurchase plan is also a positive sign for the Indian stock market, as it indicates that companies are confident about the future and are willing to invest in themselves. The move is likely to encourage other companies to follow suit and could lead to an overall increase in investor confidence in the Indian market.
In conclusion, Wipro’s share repurchase plan is a positive move for the company and its shareholders. The plan will reduce the number of outstanding shares, increase EPS, and provide shareholders with a cash windfall. The move also shows that Wipro has confidence in its future growth prospects and is committed to returning surplus cash to its shareholders. Overall, the share repurchase plan is likely to benefit both Wipro and the Indian stock market as a whole.
