Partner With Us NRI

Open Free Trading Account Online with ICICIDIRECT

Incur '0' Brokerage upto ₹500

Wipro Announces Rs 12,000 Crore Share Buyback: An Arbitrage opportunity?

8 Mins 19 May 2023 0 COMMENT

Wipro, one of India's leading IT companies, has announced a Rs 12,000 crore share buyback. The buyback will be conducted through the tender offer route and will be open to all shareholders of Wipro. The buyback price has been set at Rs 445 per share, which is a premium of 19% over the closing price of Wipro shares on the NSE on April 27, 2023. The buyback will be for up to 269,662,921 equity shares, which is 4.91% of Wipro's total paid-up equity share capital. The buyback is expected to be completed by the end of July 2023. Currently, as per Sebi guidelines, 15% of buyback (Rs. 1800 crore in Wipro case) is to be reserved for retail category (up to Rs 2 lakh).


Source: ICICIdirect Research

Wipro Buyback: An Arbitrage Opportunity?

Wipro stock is currently trading at Rs. 386.80 which is at about 15% discount to the buyback price, which presents investors with a potential arbitrage opportunity to investors.  However, this is a high risk trade as the acceptance ratio for buyback continuously varies. Also, if shares fall sharply after the buyback, the shares not accepted in buyback can pull down the overall returns.

Assuming 60% acceptance ratio, breakeven price arrives at Rs.290 per share. However, if the acceptance ratio changes to 35% the breakeven would be at Rs. 350 per share. The last buyback from Wipro saw 100% participation from small investors in 2020.



Source: ICICIdirect Research

Wipro Buyback History:

Buyback year


Buyback size

Buyback price

announcement date

(Rs in bn)

per share (Rs)





















Benefits of Share Buybacks

There are several benefits of share buybacks for companies.

  • First, share buybacks can help to increase shareholder value. When a company buys back its own shares, it reduces the number of shares outstanding. This can lead to an increase in the earnings per share (EPS) for the remaining shareholders.
  • Second, share buybacks can help to improve a company's balance sheet. When a company buys back its own shares, it uses cash to do so. This can reduce the company's debt levels and improve its financial position.
  • Third, share buybacks can help to signal to investors that a company is confident in its future prospects. When a company buys back its own shares, it is essentially saying that it believes that its stock is undervalued. This can lead to an increase in demand for the company's stock and an increase in its share price.

What will be Acceptance Ratio and how does it matter? 

  •  Acceptance ratio is the number of shares accepted in a buyback offer as compared to the total number of shares tendered. As per SEBI rules, regulations, circulars etc. 15 % of the total buyback size is reserved for small investors with holdings up to Rs 2 lakh in the company.
  •  There are 2 Categories - Reserved Category and General Category
  •  Reserved Category means those investors holding Upto ₹2,00,000 shares in DEMAT.

Few Important Points:

  • If you have bought Wipro through MTF, you need to do CTD in such a way that on ex-date shares are available in your Demat A/C.
  • If you have done SAM (Shares as Margin) in Wipro, you need to de-pledge them so that on ex-date shares are available in your Demat A/C.

ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.  Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The non-broking products / services like Mutual Funds, Insurance, FD/ Bonds, loans, PMS, Tax, Elocker, NPS, IPO, Research, Financial Learning, Investment Advisory etc. are not exchange traded products / services and ICICI Securities Ltd. is just acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory.  The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.