In a big development, IT major Wipro has declared a massive share buyback program, which will be valued at Rs 9500 crore.
What does this mean?
Why a company buybacks its own shares?
Keep reading to find out more!
Wipro’s Massive Share Buyback Program: Rs 9500 Crore
Wipro has announced that they will buyback shares worth Rs 9500 crore from their shareholders.
99% of the shareholders have already given then green signal for this share buyback program.
As per the information shared by Wipro, they are willing to pay Rs 400 for each share.
And at the time of writing, Wipro shares were trading at Rs 324.
Hence, if an investor sells their share today to Wipro under their buyback program, then they can get Rs 66 more than the market value.
Wipro said, “…resolution (special resolution seeking approval for buyback of equity shares) has been passed by members through postal ballot by remote e-voting process with requisite majority,”
Under this buyback program, around 23 crore shares will be bought back by Wipro, at a price of Rs 400 per share, amounting to total spend of Rs 9500 crore.
In 2019, Wipro had bought back Rs 10,500 crore worth of shares, at a price of Rs 325 per share. Similar share buyback program was also launched by Wipro in 2016 and 2017.
Interestingly, India’s biggest IT firm: TCS has announced a massive share buyback program of Rs 16,000 crore, wherein they will pay Rs 3000 per share.
As of now, TCS shares are trading at Rs 2620.
Why Companies Roll Out Share Buyback?
Often, a share buyback program is launched by a listed company to reward their loyal investors, and to help them make more money than the current market rate.
In some cases, the company doesn’t provide any dividends but rather launches a share buyback program.
Besides, by buying their own shares, the company has retain more control over their operations and ownership, since the investors will have less shares, and the management will have more.
Wipro hasn’t revealed the exact reason why their share buyback program has been launched this year.
We will keep you updated, as more details come in.
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