Wipro plans Rs2,500-cr buy-back as Q2 slump hits stock
21 April 2016
IT services major Wipro on Wednesday announced a buyback of shares at Rs625 per share – at 4 per cent premium over Wednesday's price - to mop up 40 million shares, or 1.6 per cent of the company's total paid-up equity, for around Rs2,500 crore.
The announcement followed the fourth quarter results of the company, which showed that Wipro's margins fell even as its net profit matched market expectations.
The Wipro stock dipped 5.5 per cent to Rs568 on the Bombay Stock Exchange (BSE) in early morning trade after the company reported a flat consolidated net profit at Rs2,235 crore against average analyst's estimate of Rs2,354 crore for the quarter ended March 2016 (Q4FY16). Consolidated revenues grew 6 per cent to Rs13,742 crore on a sequential basis.
The promoters own 73.34 per cent of the company and the buyback will take it to nearly 75 per cent.
The Azim Premji flagship, however, said it expects a better show in the long term and projected a doubling of revenue to $15 billion by 2020.
The company has projected 1-3 per cent ($1.9-1.94 billion) revenue growth in the first quarter of 2016-17, largely in line with its forecast in the same period last year.
Margins for the company's IT services fell 10 basis points to 20.1 per cent on a sequential basis and 2 percentage points on a year-on-year basis.
The company expects IT services revenues in the April-June 2016-17 quarter to be in the range of $1,901 million to $1,939 million, posting a QoQ growth of 1.0-3.0 per cent.
''Softness in energy and utilities and banking in Europe were some of the headwinds in this quarter,'' CEO Abidali Neemuchwala said at a press conference.
Wipro has also put together a six-point strategy to steer the company towards the growth path, alongside its peers.
The board also approved a buyback proposal for purchase by the company of up to 40 million shares at a price of Rs 625 per equity share aggregating up to Rs 2,500 crore.
At 09:33 am, the stock was down 5 per cent at Rs571 on the BSE compared to a 0.78 per cent rise in S&P BSE Sensex. A combined 1.38 million shares changed hands on the counter on the BSE and NSE so far.