Wipro, Bajaj Auto & More Major Buybacks Announced in 2026 | CA Rachana Ranade

[00:00:00] Kaffee in seiner besten Form. Mit Cubo wird jeder Kaffee auf Knopfdruck zum Genussmoment. Denn mit der neuen Cubo One Kapselmaschine von Chibo genießt du feinsten Spitzenkaffee aus besonderen Anbaugebieten. Vollmundige Aromen dank innovativer Press-Brew-Technologie und über 17 Sorten Kaffee für jeden Geschmack. Erlebe Premium Kaffee schon ab 29 Euro. Entdecke jetzt die Cubo Kapselmaschinen in deiner Chibo Fiale und auf Chibo.de.

[00:00:27] Hey folks CA Rachana Ranade here. You know Q4 results are out and some big names have announced buybacks. Big names like what? Like Wipro Ltd, like Bajaj Auto, like Rolex rings, Scient Ltd. So if you are like are these the only companies who have announced buybacks? Answer is no. I have just given you examples especially of those companies whose record date is yet to be announced or example Wipro the record date is just around the corner. So in today's video we are going to understand what is the concept of buybacks?

[00:00:56] What is the concept or what is the difference between tender offer versus an open offer? Taxation of buybacks? How does that happen? We'll understand what is the historic performance of buybacks? When it comes to the latest buyback announcements, the ones that we discussed right now, Bajaj Auto or Wipro, how can we take a decision on whether it makes sense to apply for these buybacks or not? And if one were to decide to apply for buybacks, how to apply? So video is going to be extremely informative. Keep on watching the video till the end.

[00:01:24] You know many people just read these stock names and take a buy or a sell decision very instinctively. Ideally that is not to be done. You should do a full-blown in-depth analysis of any stock before you take a final decision. And that's what exactly I do in my pro investor membership videos where I release one stock video every single month and that's why we call it as stock of the month. Now anyone who wants to enroll for the pro investor membership so that you can get some buy sell recommendations, this one is not for you.

[00:01:52] Because in this entire membership, what I can guarantee you is a lot of knowledge. Because every single company that we study, we study it in depth including what is the business of the company, we understand the industry to which it pertains, the history of the company, the business strategies, fundamentals, technicals, valuations and so much more. And that is the reason why every single video runs up to 40 to 50 minutes.

[00:02:16] And guess what? Even if you are not a member, you will be able to watch Bajaj Auto Limited's video which I had released back in 2024. Absolutely free of cost and that's where you will find the demo of this video. Link to this is also there in the pinned comment and in the description box below. Alright, let's get started with the basics. We'll start with what is a buyback? Then we'll talk about types of buyback and what is the taxation of buybacks? Okay, let's start with the basic definition, simple definition given on the official SEBI investor education portal.

[00:02:46] And it mentions that buyback of shares refers to a company repurchasing its own shares from the existing shareholders. Very simple. Like there is an issue of shares, exact opposite will be buying back of own shares. Who is going to buy it back from whom? Company is going to buy it back from its existing shareholders. Now what happens is that this reduces the number of outstanding shares in the market. Now how can the outstanding shares actually reduce? It's very simple. So for example, let's say a company originally had 25 shares.

[00:03:15] Okay, now the company buys back 5 shares. Now these 5 shares which are bought back, these earlier used to be physically destroyed. Now they'll be electronically destroyed. And that is the reason why the number of shares will actually go down from 25 to 20. Simple idea? Yes. So the number of shares, outstanding shares is going to reduce. And that will increase the value of remaining shares. And you might be like, how can the value of remaining shares increase? Let's do a normal blackboard or a green board discussion. Okay.

[00:03:45] So let's say the profit after tax of the company was rupees 100. Okay. Earlier outstanding number of shares were how much? 25. So 100 divided by 25, the EPS would have been 4. Right. Now what happened post buyback? The number of shares dropped down from what to what? From 25 to 20. Right. And that is the reason why the new EPS will be 100 divided by 20, which will go up to 5. And that's how I'm telling you that the remaining shares value will increase. The EPS went from 4 to 5. Simple. Now let's understand about which are the types of buybacks.

[00:04:14] We have something like a tender offer buyback. And we have something like an open market offer buyback. Now open market offer buyback has anyways been discontinued by SEBI. Oh, nice graphic. Okay. That has been discontinued by SEBI. But SEBI is considering to bring it back. If it brings it back, then in some other video, we'll talk about open market. Right now, let's focus on tender offer buyback. Now what happens in this is that the company fixes the price for buyback. So there's no guesswork. Company will say that we'll buy the back. We'll buy.

[00:04:42] We'll buy back the shares at XYZ rupees. Okay. Price is fixed. Second, they'll mention a record date. And what is a record date? Basically, you should hold the shares in your DMAT account on that specific date. Then only will you be eligible for the buyback process. Okay. And once that is also declared, ultimately, a ratio which is called as the acceptance ratio is also declared. Just to give you an example, let's say acceptance ratio is 15 is to 1. What do I mean by this?

[00:05:09] If you have 15 shares, you will be eligible to participate for one shares. So basically, not participate, you will tender 15 shares. But only one out of those 15 shares will be actually bought back by the company. That will be the acceptance ratio. Okay. 15 is to 1 is just an example. Okay. The ratio can change, obviously. Typically, what SEBI also does is that they ensure, SEBI ensures that small shareholders get benefit and their shares are accepted properly.

[00:05:35] And that is why 15% of the buyback size is specifically kept aside for small shareholders. Right. Now, if these basics are clear, let's quickly move on to taxation. Because the moment there is a gain in this buyback, which typically is because company offers the buyback at a price which is higher than the market price. It's ideally given at a premium. And whenever such a thing happens, it leads to a gain. And whenever there is a gain, government is like capital gain. So there are two types of capital gains.

[00:06:03] Everyone understands that LTCG, STCG. So if it's a long term capital gain, you will have to pay tax at the rate of 12.5%. Of course, 1,25,000 exemption is available as usual. And if it's a short term capital gain, you will have to pay 20% tax. Okay. If basics are clear in the next section, we'll talk about the historical performance and specifically, we'll also focus on Wipro and Bajaj. Now, what I've done is that we have actually tried to understand how company stock prices behave post buyback. Okay.

[00:06:32] And for that, we have taken the data from 2004 to almost 2022. We tried to compile a data where all these companies who came up with their buybacks in these years, what was the price of that stock on the date of buyback? What was the price of the stock after one month, after one year, after three years and whatnot? That's just for you to show how much efforts have been taken. This is the whole list of all these companies that came up with the buyback. Then we tried to calculate how much was the return, the point that I was mentioning, right? How much was the stock price back then?

[00:07:01] And so how much was the stock price after one week and one month and three months, six months, one year, two year, three years, whatever. But what is extremely important is what was the result, right? Now you can see we have calculated two sorts of results. One is an average, one is a median. See, average is to be avoided when there could be outliers where there can be extremely high returns or extremely low returns. That is why typically averages should be avoided. What could be better in analysis in such cases would be a median. Median is the middle value. Okay.

[00:07:31] So now let's understand what is the median return of stocks which came up with a buyback. So just understand this. If a company came up with a buyback instead of offering your shares for a buyback, had a person held on to those shares, what would have been the median return? Okay.

[00:07:59] But three years absolute median return was 43.4%. So don't get boggled by 43.4%. The CH here will come to again 12.6. Okay. 12.6, 12.7, whatever. So that is where we understand that. Okay. Okay. Even holding on to the stocks instead of offering it for a buyback also could make sense. Now typically what happens is that, you know, if promoters feel that they have high conviction about their own company, that the company can grow extremely big in the next two, three, four, five years, whatever.

[00:08:29] However, in that case, even though the company comes up with a buyback, generally promoters don't participate in the buyback. So what I typically do is whenever a company comes up with a buyback, I check whether promoters are participating or not. If promoters are participating in big numbers, my enthusiasm drops. Okay. Now the two stocks that we discussed in the beginning as well, which have come up with a buyback, one is Wipro, one is Bajaj Auto. So what is the case?

[00:08:57] Are promoters actually participating here or not? For Wipro, they are. Okay. Bajaj Auto, it is yet to be announced. When it is announced, I'll just maybe update it in my social media handles. But for Wipro, how many number of shares are the promoters willing to give in this buyback process? Okay. And that is 744 crore shares are being offered in this entire buyback. Is that a huge number? Answer is yes. So of course, you know how much will my enthusiasm level be.

[00:09:25] Plus with the overall IT sector right now, I hope you have watched this video of mine wherein I have discussed about the IT sector in depth. My enthusiasm level is overall on a lower side. But still, if you want to quickly check in the last, in this 2020 decade, what was the overall position for Wipro as far as buybacks are concerned? Three buybacks. One was in 2020, one was in 2023, one was in 2026. 2020, let's not discuss because one year return was 97% sky high. We may not get such crazy returns. It was COVID year.

[00:09:54] The returns were exceptionally well. If I'm talking about 2023, the offer price was 223. And three years later, the offer price for buyback is 250. The barely 27 rupees jump, right? And we understand what is the overall problem with IT right now. Now, if you also check one year later price, it was 228. So, if a person would have given the shares for buyback or would not have given the shares for buyback, the price would have been more or less similar. Only point was that if the person would have offered the shares for buyback, that person

[00:10:23] would have gotten the gains immediately. Here, that person would have been required to wait for almost one year to get to that 228 mark. Okay. For 2026, it will be interesting to see what price the stock goes to post one year. We don't have that data right now. Now, let's understand about Bajaj Auto. The offer price was 4,600 back in 2022, was 10,000 back in 2024 and 2026, it is 12,000. So, offer price is continuously increasing and how, right?

[00:10:51] If you see overall one year returns are also pretty much decent enough, 28%, 23%. But just because the returns are that good, does it mean immediately you should buy these stocks before the record date and tender it for... Wait, wait, wait. That is what I told you. You need to understand the company in absolute detail. And that's why one more time, quick reminder, don't forget to watch this demo video of Baja Jotto and check the link in the print comment and description box below. Let's move on with the final chunk of the video.

[00:11:18] We have all the companies back on our screen right now who are coming up with a buyback. You can see Wipro, Baja J, Rolex Rings and Siant. You can also see the record date for Wipro which is 5th June. Others are yet to be announced. Of course, the buyback type is tender offer. The buyback price, look at this column, look at the current market price column and then you will understand the point that I told you that generally buyback happens at a premium to the current market price. And how much is the premium over CMP? For Wipro, it is 22.4%. For Baja J, it is 14.7%. Rolex, 28.10%.

[00:11:47] And Siant, it's 23.86%. And just in case if a person were to go ahead for applying for the buyback, what are the steps? Steps are extremely simple. I'm going to show you the steps using Xeroda app. So the kite app, obviously. What you need to do is you need to log in. Then you need to just click on bids. Then click on corporate actions. And then click on buyback. Now, once you click here, you will be able to see all the details. And then you click on place bid. Once you do that, you just have to enter the bid quantity that you want to offer for buyback.

[00:12:16] Then you will have to review the entire screen, agree to the terms and then click on submit bid. Once you do that, you will get this confirmation which says the bid submitted successfully. Once you do that, you can also check your orders. And if the allotment is done, it will show as allotment completed. I hope you have understood a lot about buyback today. If you did, please don't forget to smash the like button. Please don't forget to share this video with your friends. I'll see you in the next one. Until then, take care. Jai and bye-bye.

[00:12:47] All of these are fraudsters promising unbelievable returns through stock tips. I don't provide any calls or advisory services. I provide only educational content through my social media handles and through my website rachanaranade.com and rachanaranade.in.