Wipro Limited, a leading IT services company, has made headlines with its recent announcement of a 1:1 bonus share issue. This decision was taken during a board meeting held on October 16-17, 2024. The board has recommended this bonus issue to shareholders for their approval through a postal ballot. This marks Wipro’s first bonus issue since 2019, when it issued shares in the ratio of 1:3.
The proposed bonus will grant one bonus equity share of ₹2 for every fully paid-up equity share held by eligible shareholders. Additionally, there will be a corresponding bonus American Depositary Share (ADS) issued at the same ratio. The exact record date for determining eligible shareholders has yet to be announced but will be communicated later. This means that individuals who hold Wipro shares in their demat accounts on the record date will receive an additional share as a bonus.
Financial Overview
Wipro’s decision comes on the heels of its impressive financial performance for the quarter ending September 2024. The company reported a 21% increase in net profit, amounting to ₹3,209 crore compared to ₹2,646 crore in the same quarter last year. This growth exceeded market expectations and reflects positively on Wipro’s operational efficiency.
The company’s revenue from operations saw a slight decline of 0.95%, totaling ₹22,301.6 crore against ₹22,515.9 crore in the previous year. However, the IT services revenue grew by 1.3% quarter-on-quarter, indicating resilience in its core business segments.
Historical Context
Wipro has a history of issuing bonus shares to its shareholders. Since 1995, the company has announced nine bonus issues. The last one before this was in 2019, where it issued shares at a ratio of 1:3. Other notable ratios include 1:1 in 2017, and 2:3 in 2010. This consistent practice of rewarding shareholders highlights Wipro’s commitment to enhancing shareholder value over time.
Market Reaction
Following the announcement, Wipro’s shares experienced fluctuations but closed at ₹528.80 on Thursday, October 17, 2024. The stock has shown a return of approximately 28.58% over the past year, with a 52-week high of ₹580 and a low of ₹375. Analysts have noted that this bonus issue could further bolster investor confidence and potentially drive up stock prices as more investors may be attracted to the company’s improved financial health and shareholder-friendly policies.
Shareholders should keep an eye on communications from Wipro regarding the official record date for this bonus issue. Once announced, those holding shares on that date will automatically qualify for the additional shares without any action required on their part.
