Wipro will announce bonus shares to its equity shareholders on December 3, 2024, at a ratio of 1:1. This announcement is significant not only for shareholders but also for Wipro and the markets.
This article covers the announcement and analyzes how it impacts Wipro, investors, and the markets. So, here’s how the announcement impacts these segments.
Wipro Bonus Share Announcement
Wipro’s Board of Directors is considering issuing bonus shares per the prevailing provisions under the Companies Act 2013 and the SEBI Regulations 2018. According to the exchange filing on October 13, 2024, the company scheduled meetings for the same on October 16 and 17. The software company also said that it would dispatch the shares within two months of the announcement and has set the date for December 15.
Wipro has been announcing bonus shares since 1971, when it issued the first bonus share to its investors. Since then, the software giant has issued bonus shares to its investors between 1981 and 1986. Wipro also issued bonus shares in 1997, 2004, and 2005, then again in 2010 and 2017. The company last issued bonus shares to its investors in 2019.
What’s at Stake for Wipro?
The company’s frequent issuing of bonus shares means that Wipro’s financials are going strong, and it has managed to maintain enough reserves. Doing so has also allowed the company to gain the trust and confidence of its investors, signaling growth and a commitment to shareholders.
Bonus shares have also helped boost liquidity and trading volume since Wipro has increased the number of outstanding shares.
Shareholder Perspective
With these additional shares, existing shareholders get to increase their stake in the company and their capital gains. Issuing bonus shares also decreases the face value, which means that small investors can afford them.
The Markets
The markets have reacted positively to the announcement, and the overall sentiment and impact have also been generally positive, especially in the IT sector, where Wipro operates. However, the impact Wipro’s announcement will have on the indices remains to be seen.
According to Trendlyne data, 41 analysts recommend selling the share rather than holding on to it, and four recommend buying. However, 14 analysts have called for selling Wipro shares, with ten more suggesting a Strong Sell. According to expectations, the stock’s EPS should grow by 12.3% in FY25, and the average target price should witness a 5% decline and hover around Rs. 530 per equity share.
Wipro also recently collaborated with Lineaje, a US software supply chain security solutions provider, to help enterprises secure open-source components. The collaboration was led by the software company’s investment counterpart, Wipro Ventures, which vouches for Lineaje’s offerings and innovative approaches hopes to expand into the software supply chain.
Takeaway
The software giant’s announcement is mostly seen as a positive move that only vouches for the company’s strong financial stance and commitment to its shareholders. However, it is also worth mentioning that while this announcement will mostly garner positive reactions from the markets, it doesn’t necessarily guarantee an increase in stock price, especially in the near future.
Wipro Bonus Shares
