By Sapna 
Wipro Limited, a leading global information technology, consulting, and business process services company, recently announced a 1:1 bonus share issue. This significant development has sparked considerable interest in the market, as it promises additional value for the company’s existing shareholders. Below is an in-depth look at the implications, timelines, and benefits of Wipro’s latest move.
What Are Bonus Shares?
Bonus shares are additional shares issued to existing shareholders at no extra cost. Companies typically use this mechanism to reward shareholders and increase stock liquidity. In the case of Wipro, shareholders will receive one bonus share for each share they hold, effectively doubling the number of shares in circulation without changing their overall investment value.
Record Date and Eligibility
The record date for Wipro’s bonus share issue has been set for December 3, 2024. This is the crucial date that determines shareholder eligibility for the bonus issue. Investors must own Wipro shares by this date to qualify for the bonus allotment
To clarify, if you purchase Wipro shares after the record date, you will not be eligible for the bonus shares. On the other hand, if you hold shares on or before the record date, the bonus shares will be automatically credited to your demat account.
Key Dates:
- Board Approval: Wipro’s board approved the bonus issue in mid-October 2024.
- Record Date: December 3, 2024.
- Credit Date: The bonus shares will be credited by December 15, 2024, allowing time for administrative processingET NowBusiness Today.
Why Did Wipro Announce Bonus Shares?
The decision to issue bonus shares is part of Wipro’s strategy to enhance stock liquidity and broaden its investor base. Bonus shares make stocks more affordable by effectively reducing the share price while maintaining the overall value of shareholders’ investments. This can encourage trading activity and attract new investors.
Historically, Wipro has issued bonus shares multiple times, with previous distributions in 2019, 2017, and earlier. Such actions have been positively received by the market, reinforcing the company’s commitment to rewarding its investors
Impact on Share Price and Market Reaction
Following the announcement, Wipro’s stock saw a 3% rise, reflecting positive market sentiment. The increase in share price highlights investor confidence in the company’s financial health and future prospects. Analysts believe that this bonus issue will enhance Wipro’s appeal, particularly to retail investors, as the share price adjusts to reflect the increased number of shares in circulation
How Does This Affect Shareholders?
For existing shareholders, the bonus issue increases their shareholding without requiring additional investment. While the number of shares doubles, the stock price adjusts proportionally. For example, if a shareholder owns 100 shares at ₹500 each, post-bonus they will own 200 shares, and the price per share will adjust accordingly.
This move is beneficial for long-term investors, as it provides additional shares, potentially increasing returns if the stock price appreciates over time.
Conclusion
Wipro’s decision to issue bonus shares is a strategic move aimed at rewarding shareholders and boosting stock liquidity. With the record date set for December 3, 2024, investors have a clear window to ensure eligibility. The market’s positive reaction underscores the confidence in Wipro’s growth trajectory and commitment to delivering shareholder value. For investors, this is a compelling opportunity to participate in one of India’s leading IT firms’ growth story.
As always, investors are advised to consider their financial goals and consult with advisors before making any investment decisions.