IT company, Wipro's American depositary shares (ADR) nosedived nearly 5% on Thursday, October 17, 2024, after the company lowered its FY25 guidance. ADR shares could not rejoice in bulls despite Wipro announcing its first bonus issue after Covid-19 pandemic. The last bonus reward was in 2019. That being said, how much bonus reward will ADR investors get?
Wipro Bonus ADRs:
The company announced the issuance of bonus equity shares in the proportion of 1:1.
For ADR investors this will mean that for every 1 (One) fully paid-up equity share held and a bonus issue [stock dividend on American Depositary Share (ADS)] of 1 (One) ADS for every 1 (One) ADS held, as on the record date, as per the filing.
The record date for reckoning eligible shareholders (including ADS holders) entitled to receive bonus shares will be communicated later. However, Wipro has announced that it will complete bonus shares action on or before December 15, 2024, two months from now.
Bonus shares are one of the many corporate actions that listed companies announce on several occasions. Bonus shares are like incentives which are free of cost given to investors. Under this corporate action, new shares are issued at the existing Face Value of equity shares of the company. Hence, the face value remains the same post-bonus issue.
Wipro ADR Stock:
In the early trade of Thursday, Wipro ADR stock nosedived by 4.8% on NYSE, to hit an intraday low of $6.11 per piece. At the time of writing, the ADR was at $6.285 per piece, down by 2.2%.
An ADR is a security that represents shares of non-U.S. companies that are held by a U.S. depositary bank outside the United States ("U.S."). ADRs allow U.S. investors to invest in non-U.S. companies and give non-U.S.-companies-easier-access to the U.S. capital markets. Many non-U.S. issuers use ADRs as a means of raising capital or establishing a trading presence in the U.S.
The latest drop in ADR is due to the cut in FY25 guidance by Wipro. For the quarter ending December 31, 2024 period (Q3FY25), Wipro expects its revenue growth in the IT Services business segment to be in the range of $2,607 million to $2,660 million. This translates to sequential guidance of (-) 2.0% to 0.0% in constant currency terms.
In the previous quarter, the FY25 revenue guidance was around -1% to 1%.
However, Wipro beats estimates in its Q2 earnings. In Q2FY25, Wipro reported a consolidated net profit of Rs 3,209 crore (attributable to owners), registering a growth of a whopping 21.25% year-on-year and 6.85% quarter-on-quarter.
In dollar terms, the company's IT services segment revenue was at $2,660.1 million, an increase of 1.3% QoQ and a decrease of 2.0% YoY. While non-GAAP constant currency IT Services segment revenue increased 0.6% QoQ and decreased 2.3% YoY.
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