1:1 Bonus Of Mega IT Company, Last Date To Be Eligible On December 2; BUY Wipro, Nuvama Sets Rs 700 Target

Wipro Bonus Issue: One of the much-awaited bonus issues is of tech giant Wipro Ltd, which is among the top bonus issuers on exchanges. Since June 2004, Wipro has delivered five bonuses in various ratios and different years. After nearly five years, the Azim Premji-backed Wipro is backed with a new bonus reward and this time the ratio is 1:1. The last date to be eligible for Wipro's bonus is on December 3. There is a recommendation of BUY ahead of Wipro's bonus record date.

Wipro Share Price:

Wipro stock price is currently at Rs 577.95 apiece, with a market cap of Rs 3,02,388.90 crore. The stock is near its 52-week high of Rs 596 apiece on BSE. YTD, Wipro stock has surged by over 21%.

Wipro Bonus Issue:

The company has fixed Tuesday, December 3, 2024, as the Record Date to determine the equity shareholders of the Company eligible for bonus equity shares (including Stock Dividend on ADS) of the Company.

Wipro declared the issuance of bonus equity shares in the proportion of 1:1. This means that the company will allot 1 (One) bonus equity share of Rs 2/- each for every 1 (One) fully paid-up equity share held and a bonus issue.

Notably, Wipro has a strong track record of bonus issuance. The last bonus issuance by Wipro was a 1:3 ratio in March 2019. This followed a bonus issue of 1:1 in June 2017, and a 2:3 bonus issue in June 2010. Prior to that, the company delivered 1:1 bonuses and 2:1 bonuses in August and June of 2005 and 2004 respectively.

BUY Wipro Stock:

According to brokerage Nuvama Institutional Equities, Wipro is at THAT crossroads again-new CEO, new expectations, new hopes. But there are two big differences this time: i) its portfolio with
higher exposure to discretionary spending is favourably placed to ride the macro recovery; and ii) the CEO this time is an internal lifer, looking to take the old guard along on the path of achieving growth on a
par with peers.

Compared to companies such as Infosys, LTIM and Mphasis, Nuvama highlighted that Wipro o has relatively high exposure to discretionary spends (60-65% of revenue). As discretionary spends were cut or put on hold over the last few quarters, Wipro had to bear the brunt-leading to a decline in top line in FY24. However, what was once its bane could become the boon now. Following the interest rate cut by the Fed in Sep-24 and improving macro dynamics in US, Nuvama expects discretionary spends to revive-in turn benefitting Wipro.

Nuvama stated that the current combination of a favourable portfolio, new CEO and inexpensive valuations make for an attractive risk-reward profile.

On the valuation, Nuvama said, "All along, Wipro has stayed a high-FCF company (112% of net income over last four years) with a highly efficient capital allocation policy. With the stock trading at a relatively attractive 23x FY26E PE, at a discount to almost all peers, and yielding a dividend of 3%, we find the risk-reward highly attractive; upgrade to 'BUY'." The target price is set at Rs 700 and the timeframe is of 12-months.