Premjis to participate in Wipro’s Rs 10,500 crore share buyback: This is how much stake they hold

While booking a massive 38% rise in Q4FY19 net profit, Wipro has once again announced its share buy back plan where promoters of the group will also participate. In a meeting held on Tuesday, the board members of Wipro approved buy back of up to 32,30,76,923 equity shares which is 5.35% of the company’s share capital. The buy back will carried at equity per share of Rs 325 aggregating up to Rs 10,500 crore. The buy back is proposed to Wipro’s existing shareholders even including persons who become shareholders by cancelling American Depository Receipts and receiving underlying equity shares. But what was the key highlight of the buy back is that, members of the promoter and promoter group of Wipro have indicated their intention to participate in the proposed buyback. This means Premji family which currently hold the majority stake in Wipro will also partake in buyback.

 The shareholding pattern for March 2019 quarter is not yet released by Wipro. One can expect it anytime soon this month. But data of previous quarter is available on exchanges. As on December 2018, Azim H Premji holds majority stake of 4.22% in Wipro with 25,44,51,816 equity shares. A little portion is also held by Azim Premji's wife and two son in Wipro. Wife Yasmeen A Premji has 0.05% or 28,33,776 equity shares, whereas Rishad Azim Premji has 0.03% stake with 18,31,109 shares and that of Tariq Azim Premji having 0.01% stake with 7,06,666 shares in Wipro.

Together, the Premjis hold 4.22% stake in Wipro.

Apart from the family, stakes are also held by Azim Premji's partners and trusts.

What is a share buyback?

A company makes a buyback or repurchase shares from its existing shareholders usually at a market price or premium. This is done usually in traditional open-market purchase or tender route. Both promoters and public shareholders can offer their shares in tender buyback, however only public shareholders can take part in open-market as per rules of Securities and Exchange Board of India (Sebi).

In tender buyback – a company fixes a price and accept shares on a proportionate basis directly from shareholders in the buyback period. While in open-market, a higher price band is decided for the shares offered, among which some are purchased by a company (they cannot the entire amount announced) from the market within a specific time-frame.

One of the common objectives of adapting this portal is to control the drop in the value of a company's stock price – by reducing the supply of stock. This in return drives price-over-equity (PE) ratio and also improves the earnings per share (EPS) of a company.

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On Tuesday, Wipro’s share price ended at Rs 281.10 per piece down by Rs 7.05 or 2.45%. Ahead of the result, the stock already touched an intraday low of Rs 278.10 per piece. 

Wipro’s proposed Buyback is subject to approval of shareholders by way of a special resolution through a postal ballot. The process, timelines and other requisite details with regard to the postal ballot will be communicated in due course. 

The company bagged consolidated net profit of Rs 2,484 crore in Q4F1Y9, higher by 37.74% compared to profit of Rs 1,808 crore a year ago same period. But, Q4FY19 PAT plunged by 1.07% as against Rs 2,510.4 crore in Q3FY19. Revenue from operations stood at Rs 15,006.3 crore in Q4FY19, up by 8.98% from Rs 13,768.6 crore in Q4FY18 but down by 0.35% versus Rs 15,059.5 crore in Q3FY19.