Wipro Buyback Plan Hopes to Yield Up to 14% Returns for Investors in the Near Term

Wipro's Upcoming Buyback Offers Potential Returns of up to 14 Percent

Investors may see returns of up to 14 percent if they tender their shares in IT services firm Wipro's upcoming buyback, according to HDFC Securities. The proposed buyback, announced by Wipro's board, involves purchasing 60 crore equity shares at a total offer size of Rs 15,000 crore, with each share priced at Rs 250.

Key Details of the Buyback Proposal

• 60 crore equity shares will be purchased as part of the buyback proposal.
• The total offer size is Rs 15,000 crore, with each share priced at Rs 250.
• The offer price represents a 25 percent premium compared to Wipro's closing price on Friday, April 23.

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Wipro has consistently sought to return a substantial portion of its cash generated to shareholders. In FY26 alone, the company distributed $1.3 billion in the form of dividends, taking its total payout ratio for the three-year block ending FY26 to 88 percent, significantly higher than its stated capital allocation policy.

Reserve for Small Shareholders

As per SEBI's regulations, 15 percent of the offer size, approximately Rs 2,250 crore, is reserved for small shareholders holding shares up to a value of Rs 2 lakh as on the record date. The minimum acceptance ratio for small shareholders is currently calculated at 30.8 percent, but historical performance suggests a more favorable outcome.

Historical Performance and Acceptance Ratio

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Following Wipro's 2023 buyback announcement, the actual acceptance ratio reached 78 percent. HDFC Securities notes that Wipro's previous buyback trends and a relatively lean retail shareholding suggest a higher acceptance ratio in the upcoming offer.

Brokerage Recommendations

Given Wipro's track record of outperformance and the prospect of stable returns amidst current market volatility, HDFC Securities recommends a "Buy" for retail investors looking to optimize short-term capital allocation by participating in the upcoming offer. Other brokerages, such as Numava Institutional Equities, have also looked at the move positively, upgrading their estimates on Wipro's FY27 and FY28 earnings by 7 percent and 5 percent, respectively.

Buyback Cycle in India

India witnessed a strong buyback cycle between FY17 and FY24, with NSE 500 companies cumulatively deploying nearly Rs 2.9 lakh crore towards share repurchases. However, the momentum was broken after the October 2024 tax overhaul. The recent changes in buyback regulations have made them attractive again for minority shareholders, noted Ikigai Asset Managers.

Wipro's Buyback History

From 2017 to 2024, Wipro had bought back shares worth Rs 45,500 crore. Depending on the investor response, a new wave of buybacks could be in store.