Shares of Wipro Limited, one of India’s leading IT companies, are set to undergo a significant transformation as they prepare for a bonus share issueThis marks Wipro’s 14th bonus issue in its history, with the record date for eligibility set for December 3, 2024Shareholders who own Wipro shares by the end of trading on December 2 will receive one bonus share for each share they hold.
This generous move comes after a hiatus since 2019 when the company issued bonus shares in a 1:3 ratio. With approximately 22 lakh small shareholders Poised to benefit, this initiative underscores Wipro’s commitment to rewarding its investors and enhancing shareholder value.
Understanding Bonus Shares
Bonus shares are additional shares given to existing shareholders without any cost, based on the number of shares they already own. This practice is often employed by companies to distribute accumulated profits while maintaining cash reserves. In Wipro’s case, the issuance of bonus shares not only reflects its strong financial health but also aims to increase liquidity in the stock market.
Wipro’s decision to issue a 1:1 bonus means that for every share held, shareholders will receive an additional share. This is particularly noteworthy as it signals confidence in the company’s future growth prospects and its ability to generate consistent returns for investors.
Historical Context
Wipro has a long-standing tradition of rewarding its shareholders through bonus issues. The company first introduced bonus shares in 1971and since then, it has conducted this practice multiple times, with varying ratios. The following table outlines Wipro’s historical bonus share issuance:
| Year | Bonus Ratio |
|---|---|
| 1971 | NA |
| 1981 | 1:1 |
| 1985 | 1:1 |
| 1987 | 1:1 |
| 1989 | 1:1 |
| 1992 | 1:1 |
| 1997 | 2:1 |
| 2004 | 2:1 |
| 2005 | 1:1 |
| 2010 | 2:3 |
| 2017 | 1:1 |
| 2019 | 1:3 |
This upcoming issuance continues a legacy that has seen Wipro transform an initial investment into substantial wealth over decades. For instance, an investor holding 100 shares since 1971 would now possess over 682,667 sharesshowcasing the compounding effect of such corporate actions.
Market Reaction and Future Outlook
As Wipro approaches the record date, market sentiment around the stock remains positive. The company’s shares have shown resilience, closing at ₹579 recently, reflecting a 21% increase year-to-date and a rise 42% on an annual basis. Analysts suggest that this bonus issue could further enhance investor confidence and attract new shareholders looking for growth opportunities in the IT sector.
The broader context of Wipro’s performance also indicates that it has been keeping pace with industry benchmarks. For instance, while Wipro has delivered robust returns compared to its peers, it continues to focus on innovation and expansion in various technological domains.
Conclusion
Wipro’s announcement of a bonus share issue is more than just a financial maneuver; it represents a strategic approach to enhance shareholder value and maintain investor loyalty. As the company prepares for this significant event on December 3, stakeholders are keenly observing how this will affect stock liquidity and overall market dynamics.
In summary, Wipro’s commitment to rewarding its shareholders through this latest bonus issue reflects its robust financial health and strategic foresight in navigating the competitive landscape of the IT industry.
