Wipro Considers Bonus Shares Again: A History of Generous Rewards for Investors

Wipro, the IT services company, is set to discuss the possibility of issuing bonus shares when its board meets to approve the Q2 results. If approved, this will be the 14th time Wipro has given bonus shares, making it the leader among Nifty companies in this regard.

Wipro first issued bonus shares in 1971, with the latest announcement in 2019, where shareholders received three additional shares for every one they owned. Since then, Wipro has issued bonus shares six times between 1981 and 1996, and again in 1997, 2004, 2005, 2010, 2017, and 2019. In the last decade, the company has provided bonus shares five times.

In comparison, Infosys has issued bonus shares eight times, while TCS has done so only three times.

Companies issue bonus shares to improve stock liquidity and make shares more affordable for investors. Bonus shares are free additional shares given to existing shareholders, and those who hold shares before the record date will receive them without any cost. Once issued, bonus shares have the same rights as regular shares, including participation in dividends and other corporate actions.

However, analysts expect Wipro to have the weakest performance among its peers this quarter, forecasting flat growth in revenue. Brokerage firm Nomura predicts revenues will be unchanged quarter-on-quarter, despite Wipro’s guidance of a slight decrease or no change. They expect a 40 basis point increase in EBIT margins due to cost-control measures and higher utilization at Capco, despite the impact of recent salary hikes.