Wipro share price hits fresh 52-week high as buyback offer opens; rallies 145% from March lows

Wipro share price jumped nearly 2 per cent to hit a fresh 52-week high of Rs 390.40 apiece today on BSE as the company’s Rs 9,500 crore share buyback offer opened today. Last month, shareholders had approved Wipro’s buyback plan for purchase of up to 23.75 crore equity shares at Rs 400 per share. The share buyback offer will close on January 11, 2021. This is the fourth buyback offer by Wipro in the last five years. Wipro shares have rallied 144.6 per cent from March low of Rs 159.60 apiece. Jyoti Roy, DVP- Equity Strategist at Angel Broking Ltd, said that investors with a short term investment horizon can tender their share in the buyback given the fact that there would be no tax liability in the investor tendering their shares in the buyback.

Last year in April, Wipro had announced a share buyback of Rs 10,500 crore to repurchase 32.3 crore equity shares at a price of Rs 325 per equity share, which was at over 15 per cent premium to stock price back then. Similarly, the IT major bought back Rs 2,500 crore worth of shares in 2016 and Rs 11,000 crore worth of shares in 2017.

Analysts at Angel Broking recommended investors with a long-term investment horizon of greater than one year to hold on to the stock given strong demand growth expected for IT services due to increased adoption of digital technologies. “Moreover, the company has been revamping its business model under the new management which is expected to bear fruits over the next couple of years and help the company achieve industry average growth rates,” Roy added.

Analysts at ICICI Direct Research believe Wipro has all the key ingredients of robust growth in the long run. The company has strong full services capabilities across applications, infra, BPS and engineering, which should help it as integrated deals gain prominence. The brokerage firm has given ‘hold’ rating to the stock with a target price of Rs 435 per share, implying an upside of nearly 12 per cent. The induction of a new CEO with focus on profitable growth made the brokerage firm positive on Wipro’s future growth. ICICI Direct Research said that this coupled with the new CEO’s focus on simplification of organisation, improving client mining, focus on fewer verticals and geographies to drive growth is expected to bode well.