Due to slump in shares of rival Infosys and TCS, Wipro shares are leading the benchmark Sensex supporting the index to trim losses. India’s third-largest software services of stock firm Wipro, the top gainer on the 30-share barometer. Yesterday its shareholders have approved the company’s Rs 11,000-crore buyback proposal. Being one among the top three contributors to Sensex gains, Wipro rose as much as 1.8% to the day’s high of Rs 296.9 on BSE.
The company said last month that it will purchase up to 343.75 million shares at Rs 320 per scrip. The total size of the offer will be up to Rs 11,000 crore.
“The aforesaid special resolution has been passed through postal ballot and e-voting by members by requisite majority,” Wipro said in an exchange filing.
The voting, which ended on August 28, saw 99.68% of the votes being cast in the favor of the buyback offer. “The company has fixed September 15 as the record date for determining the entitlement and the names of equity shareholders, who are eligible to participate in the buyback,” it said in a separate filing.
Share buybacks improve earnings per share and return surplus cash to shareholders while also supporting share price during periods of sluggish market conditions. As per the report 30 June 2017, Wipro had ‘cash and cash equivalents’ of Rs 5,432 crore on its books and ‘investments’ of Rs 31,772 crore, totaling Rs 37,204 crore. In June 2017, Wipro successfully completed the issue of bonus share in ratio 1:1, which was effective from 13 July.
Among Indian IT companies, TCS, which had a cash kitty of over Rs 43,000 crore, has already completed a Rs 16,000 crore buyback program earlier this year. The Infosys board has also identified an amount of up to Rs 13,000 crore to be paid out to shareholders during the financial year 2018.