Wipro Shares Show Significant Volatility Amid Bonus Issue and Market Conditions
The share price of Wipro Ltd. is fluctuating significantly; certain trading applications have seen a 50% decline. Early indications of growth in the BFSI (Banking, Financial Services, and Insurance) sector are being seen by the IT company, which has had to deal with client-specific difficulties in a demanding demand environment. According to analysts, investors are presented with an alluring risk-reward profile by the combination of a robust portfolio, the leadership of the recently appointed CEO Srini Pallia, and favorable prices.
Today, Wipro’s stock went ex-bonus at a 1:1 ratio. After factoring in the bonus issue, the stock opened 1.09% higher at Rs 295.50 on the BSE. However, as of yesterday’s closing, the unadjusted share price stood at Rs 584.55, showing a significant 49.45% decline. The 50% drop shown on certain mobile apps can be attributed to some trading platforms displaying the unadjusted price, which does not account for the bonus issue.
Following the record date of December 2, 2024, which will identify the eligible shareholders, Wipro will award bonuses. Bonus shares, which are intended to boost liquidity, will soon be distributed to these shareholders from the company’s free reserves. One fully paid-up share will be awarded to shareholders for each share they currently own in a 1:1 bonus ratio.
This bonus issue lowers the stock price proportionately while increasing the number of shares in circulation. As of September 30, Wipro’s reserves amounted to Rs 56,808 crore. Following the bonus, the company’s paid-up equity share capital will increase to around Rs 20,925 crore, with approximately 10.46 billion equity shares.
Wipro’s bonus issue is its first since 2019 when the company issued bonus shares in a 1:3 ratio. The company has previously issued bonus shares in 1:1 ratios in 2017 and 2005, and in a 2:1 ratio in 1997. Wipro also announced a share buyback plan last year.
Despite facing challenges, analysts remain positive about the company’s future, citing its growth potential under the new leadership and its ability to leverage its strong portfolio to improve its market position.
FAQ: Wipro Ltd. Share Price Fluctuations and Bonus Issue
1. Why is Wipro’s share price showing a 50% drop on some mobile apps?
Wipro’s share price is showing a 50% drop on certain mobile trading apps due to the unadjusted share price being displayed. The company’s stock recently went ex-bonus at a 1:1 ratio, meaning shareholders will receive one additional share for every share they hold. Some apps are showing the unadjusted price, which reflects a significant decline before accounting for the bonus issue.
2. What is an ex-bonus and how does it affect Wipro’s share price?
An ex-bonus date is when a company issues bonus shares, and the stock price is adjusted accordingly. In Wipro’s case, the ex-bonus ratio is 1:1, meaning shareholders will receive one additional fully paid-up share for every share they hold. The bonus issue reduces the stock price proportionately, but increases the number of shares in circulation, thus affecting the stock price temporarily.
3. What is the current status of Wipro’s stock price?
After the bonus adjustment, Wipro’s stock opened 1.09% higher at Rs 295.50 on the Bombay Stock Exchange (BSE). However, the unadjusted closing price from the previous day was Rs 584.55, showing a 49.45% drop, which can be misleading if the bonus issue is not accounted for.
4. How is Wipro’s bonus issue structured?
Wipro’s bonus issue is structured at a 1:1 ratio, meaning shareholders will receive one bonus share for every share they already own. This is part of Wipro’s strategy to increase liquidity in the market.
5. When did the bonus issue record date occur?
The record date for Wipro’s bonus issue was December 2, 2024. This date determines the eligible shareholders who will receive the bonus shares.
6. How will Wipro’s bonus issue impact its paid-up capital?
Post-bonus issue, Wipro’s paid-up equity share capital is expected to be around Rs 20,925 crore, with approximately 10.46 billion equity shares, based on reserves of Rs 56,808 crore as of September 30, 2024. This increase in the number of shares will dilute the share price proportionally.
7. When was the last bonus issue by Wipro?
Wipro’s most recent bonus issue was in 2019, where the company issued bonus shares in a 1:3 ratio. Prior to that, Wipro had issued bonus shares in 1:1 ratios in 2017 and 2005, and in a 2:1 ratio in 1997.
8. Why are analysts still optimistic about Wipro despite its challenges?
Analysts remain optimistic about Wipro due to its strong portfolio, the leadership of new CEO Srini Pallia, and positive early signs in the BFSI sector. The company’s growth potential, combined with its attractive valuations, is seen as offering a favorable risk-reward profile for investors.
9. What other corporate actions has Wipro taken recently?
Apart from the bonus issue, Wipro announced a share buyback plan last year as part of its strategy to return value to shareholders.
