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Wipro buyback - Arbitrage Opportunity - ICICI Securities

Posted On: 2020-10-19 04:13:02


Wipro has announced the buyback of shares worth Rs. 9500 crore on October 12, 2020, which is expected to be completed by December, 2020. In this regard, we advise our clients to tender shares in the buyback, especially those clients who hold up to 500 shares (retail category). The acceptance ratio in this category is likely to be greater than 50%. Currently, as per Sebi guidelines, 15% of buyback (Rs. 1425 crore in Wipro case) is to be reserved for retail category (up to Rs. 2 lakh). This implies 3.56 crore shares can be tendered by retail investors based on buyback price of Rs. 400/share. As per Wipro's annual report (FY20) there are 8.23 crore shares in more than 5 lakh accounts where number of shares held are in the range of 1-5000 shares.

Sebi guidelines suggest 15% of the total buyback amount shall be reserved for small shareholders. 'Small shareholder' means a shareholder of a listed company, whose market value, on the basis of closing price of shares, as on record date, is not more than Rs. 2 lakh. Considering closing value of Wipro on record date at Rs. 400, a shareholder with up to 500 shares will be considered a small shareholder. At the current price of Rs. 340, the tender of shares in open offer can fetch a profit of Rs. 60/share on 50%* of positions i.e. (250 shares * Rs. 60 per share = Rs. 15,000). The break even price for the residual shares will be Rs. 280.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Arbitrage_Wipro_Oct2020.pdf

Shares of WIPRO LTD. was last trading in BSE at Rs.343.25 as compared to the previous close of Rs. 339.55. The total number of shares traded during the day was 339605 in over 5256 trades.

The stock hit an intraday high of Rs. 346.4 and intraday low of 338.75. The net turnover during the day was Rs. 116472933.


Source: Equity Bulls

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