Infosys and Wipro Buyback Offer for shares for Rs 24,000 Crores – Who can Participate?

Infosys and Wipro Buyback Offer of shares - Should you participate-minInfosys and Wipro Buyback Offer for shares for Rs 24,000 Crores – Who can Participate?


This week, Infosys and Wipro Buyback offer of shares would open for totaling to Rs 24,000 Crores. These IT jaints have cash surplus and they want to buy their own shares from open market at a premium to current share prices. Infosys buy back offer price is at 20% higher compared to current market price. On other hand, Wipro buy back offer price is just 8% higher compared to current market price. What is Buyback offer of shares? What are the details of Infosys Buyback offer? How does Wipro Buyback offer look like? If you are the investor in these companies, you might get doubt whether you need to participate in this buyback offer of Infosys and Wipro Shares or not?

Also Read: Best Portfolio Management Services (PMS) in India for 2017-2018?

What is Buyback offer of shares?


Stock buybacks or Buyback offer of shares refer to the repurchasing of shares or stock by the company that issued them. Essentially, a buyback occurs when the issuing company pays shareholders the market value per share and re-absorbs that portion of its ownership that was previously distributed among public and private investors

Details of Infosys Buyback Offer / Offer to buy (OTB) the shares


Infosys is a leading provider of consulting, technology, outsourcing and next-generation services in India. It is the 2nd largest Information Technology (IT) company in India.

With the surplus money available with the company, it is coming up with buyback offer.

Buyback offer of shares is the tune of Rs 13,000 Crores.

Buyback offer opens on 30th November, 2017

Buyback offer closes on 14th December, 2017

Existing investors can offer their shares to the company for minimum of 1 share to maximum of 1.13 Crore shares.

Face value of the share is Rs 5 per share

The offer price is Rs 1,150 per share. The buy back price is arrived at 18% premium on the share price of 16th August, 2017.

Current Market Price is Rs 991 per share (as on 23rd November). Means company offer of Rs 1,150 is 16% higher then current market price.

The offered shares are 20% of the total paidup equity capital of the company.

Kotak Mahindra Capital and JP Morgan India Pvt Ltd are the managers for the buy-back.

Complete Infosys Buyback offer details available here.

Also Read: Top 10 Mutual Funds to invest which are suitable to all investors 

Details of Wipro Buyback Offer / Offer to buy the shares


Wipro is a leading global information technology, consulting and business process services company. It is the 3rd largest Information Technology (IT) company in India.

With the surplus money available with the company, it is coming up with buyback offer.

Buyback offer of shares is the tune of Rs 11,000 Crores.

Buyback offer opens on 29th November, 2017

Buyback offer closes on 13th December, 2017

Existing investors can offer their shares to the company for minimum of 1 share to maximum of 3.43 Crore shares.

Face value of the share is Rs 2 per share

The offer price is Rs 320 per share. The buy back price is arrived at 24% premium on the share price of 14th July, 2017.

Current Market Price is Rs 294 per share (23rd November, 2017). Means company offer of Rs 320 is just 8% higher then current market price.

The Buyback Price is higher by 220.24% of the book value per Equity Share of the Company, which as of June 30, 2017 was Rs. 99.93 per Equity Share.

JM Financial is the manager for the buy-back.

Complete Wipro Buyback offer details available here.

How Buyback offer impact the performance of these IT Companies?


If company has surplus money and it is not able fully utilize it for its growth purpose, there is no point in keeping the money idle. In such case companies would come for buy back offer of their shares. In most of the cases it is determined that, it is company’s inefficiency to utilize the available funds.

However for cash rich companies like in IT industry, the view could be little different. With such buy back, company would loose opportunities in acquisitions or business expansion.

What are the tax liabilities if an investor participates in Infosys and Wipro Buyback offer?


There are no specific tax guidelines for buyback offer of shares. Guidelines which are applicable for shares brought and sold would also apply here.

1) If you purchased the shares earlier and selling them within 1 year, short term capital gains would apply.

2) If you have purchased more than 1 year back and offering the shares through buy back offer, then the tax is zero (long term capital gains of more than 1 year on shares are zero).

How to participate in Infosys and Wipro Buyback offer?


First you need to have the shares in your demat account.

If you are doing online share trading, the process is simple. You can login to your account and go to IPO/OFS/NFO/Buyback/Rights Issue section and select the respective buyback offer and proceed with next steps.

If you are not doing online trading and depending on broker for buying or selling of shares, you can approach your broker and proceed with necessary steps.

Also Read: Best Stocks to invest as per Porinju Veliyath

Should you participate in Infosys and Wipro Buyback offer?


First let us understand few things here. Infosys is going through tough times about corporate governance issues and the disputes between management and ex-founders. Stock took beating in its share price for the last couple of months. Now due to buy back offer, Infosys share price is increasing now. There is still lot of ambiguity whether things would get stabilized and whether Infy share price would provide good returns to investors in medium to long term or not. Hence 16% premium on existing share prices through buy back offer is definitely attractive offer.

On other hand about Wipro buy back offer, with current share price, it would provide just 8% premium. Due to low non promoter share holding, there is limited scope for price appreciation in future, hence small investors were expecting good premium on buy back offer. There is not much excitement for 8% premium on current market price. However small investors may still take a bet and may proceed for buy back offer of Wipro.

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Suresh

Infosys and Wipro Buyback Offer for shares for Rs 24,000 Crores – Who can Participate

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