Why Azim Premji's Wipro shares are showing 50% fall on some mobile apps

Wipro Ltd shares began trading ex-bonus today following the company’s 1:1 bonus issue. Adjusted for the corporate action, the stock opened on the BSE at Rs 295.50, reflecting a 1.09% rise. However, compared to the unadjusted closing price of Rs 584.55 on the previous day, the stock appeared to drop by 49.45%. This discrepancy might confuse some investors, as certain trading platforms may still display the unadjusted price, erroneously suggesting a sharp decline.

December 3 marks the record date for Wipro’s bonus issue, determining the shareholders eligible for the additional shares. Investors will soon receive their bonus shares, issued in a 1:1 ratio—one new share for every share held. While bonus issues increase the total number of outstanding shares, they reduce the share price proportionately. The objective is to enhance liquidity and make the stock more accessible to investors.

As of September 30, Wipro reported Rs 56,808 crore in reserves, including free reserves, securities premium, and the capital redemption reserve. Following the bonus issue, Wipro’s paid-up equity share capital will rise to approximately Rs 2,092.59 crore, comprising over 10.46 billion equity shares of Rs 2 each. The exact number of bonus shares will depend on the paid-up equity share capital as of today’s record date.

This marks Wipro's first bonus issue since 2019, when shares were issued in a 1:3 ratio. The company had previously issued bonus shares in 2017 (1:1), 2010 (2:3), 2005 (1:1), 2004 (2:1), and in multiple instances in the 1990s. The current move continues Wipro’s tradition of rewarding shareholders through bonus shares.

Despite the bonus announcement, Wipro has faced challenges in the IT sector, including client-specific issues. However, analysts see early signs of recovery in the BFSI (Banking, Financial Services, and Insurance) segment. With a favorable portfolio, the leadership of new CEO Srini Pallia, and attractive valuations, analysts believe Wipro presents a promising risk-reward opportunity.

Last year, Wipro also returned value to shareholders through a share buyback program.