Introduction
Wipro Ltd., one of India’s leading IT services companies, has recently announced a 1:1 bonus share issue, with the stock trading ex-bonus starting today, December 3, 2024. This corporate action is set to impact shareholders significantly, as those holding Wipro shares as of the record date will enjoy increased equity.
Bonus Share Details
The Board of Directors at Wipro has declared a 1:1 bonus issue, meaning that shareholders will receive one additional share for every share they own. The record date for determining eligible shareholders has been officially set for today. This marks Wipro’s first bonus share issue since 2019 and the fourth in the last 15 years, reflecting the company’s ongoing commitment to reward its investors.
Historical Context of Wipro’s Bonus Shares
Wipro has a rich history of issuing bonus shares to its investors. The company previously issued bonus shares in 2017 (1:1 ratio), 2019 (1:3 ratio), and earlier in 2010 (2:3 ratio). Additionally, Wipro has issued bonus shares in various ratios in previous years, including 2:1 in 1997 and 1:1 in both 1995 and 1992. This consistent practice of rewarding shareholders demonstrates Wipro’s robust financial health and commitment to enhancing shareholder value.
Wipro’s Share Price Performance
Wipro’s share price exhibited a marginal drop on the ex-bonus date but has shown commendable growth over the long term. For instance, an investment of ₹10,000 made in 2009, when Wipro shares were priced at approximately ₹50, would have resulted in owning 200 shares. Post the bonus shares over the years, this number swelled to 888 shares, with a current value exceeding ₹5.19 lakh. This encapsulates an impressive return on investment, highlighting the power of long-term investing.
Market Reactions and Trading Dynamics
As of the opening today, Wipro shares were trading at ₹295.50, reflecting a 1.09% increase from the previous close. However, some trading platforms reported a staggering 50% drop when adjusted for the bonus issue, due to the unadjusted previous closing price of ₹584.55. This discrepancy may lead to confusion among investors using certain mobile apps, as they may not account for the adjustment related to the bonus shares.
Importance of Bonus Shares
Bonus shares serve as a strategic financial tool that increases the number of outstanding shares while reducing the individual share price. This adjustment is expected to enhance liquidity in the market. As of September 30, Wipro reported a free reserve total of ₹56,808 crore, underscoring its financial capability to issue bonus shares and maintain a strong fiscal position.
Conclusion
This 1:1 bonus share issue is a noteworthy event for Wipro and its shareholders, providing an excellent opportunity for long-term investors. Despite facing challenges in the current market environment, Wipro’s ability to reward shareholders and its strategic positioning under new CEO Srini Pallia could signal a positive outlook ahead. Investors are encouraged to stay informed and consult with financial experts when making investment decisions based on these corporate actions.
Disclaimer
The views and recommendations expressed in this article are those of individual analysts and should not be construed as financial advice. Investors are advised to consult certified financial advisors before making investment decisions.
