14 Oct , 2024 By : Debdeep Gupta
Shares of Wipro rose as much as 3 percent on October 14 as investors lapped up the stock ahead of a meeting on October 17 wherein the company's board is slated to consider the issuance of bonus shares.
A bonus issue is a corporate action where a company issues additional shares to its existing shareholders at zero extra cost. This is typically done in proportion to their existing holdings, meaning shareholders receive a specified number of new shares for each share they already own.
If approved, this will mark Wipro's fourth bonus issue ever, after similar corporate actions were taken in 2019,2017 and 2010. The last bonus issue happened in March 2019 when the company issued three shares to stakeholders for every share held. This time around, the focus will also be on the bonus issue ratio approved by the board.
Meanwhile, the information technology major is also due to release its Q2 earnings on the same day. Analysts are anticipating signs of recovery for IT majors from Q2 amid easing interest rates and a likely improvement in discretionary demand.
However, in Wipro's case, analysts at Nuvama Institutional Equities expect a decline in margins due to a one-month impact of wage hikes. All attention will be on the company’s growth guidance for FY25 to gauge whether recovery can be expected soon or not.
Nuvama anticipates Wipro to give a sequential growth guidance of -1 percent to 1 percent constant currency for Q3FY25. The brokerage will also look for updates on Wipro's consultancy business and deal execution.
At 10.53 am, shares of Wipro were trading at Rs 538.70 on the NSE. Anticipation of the quarterly earnings and bonus share issuance also triggered a spike in trading volumes in the counter as 63 lakh shares changed hands so far, higher than the one-week daily traded average of 59 lakh shares.
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