Azim Premji-led Wipro has seen its stocks perk up since it announced a plan to de-merge its non-IT businesses into a separate entity, Wipro Enterprise Limited. On November 1, the day when Wipro announced the demerger, the stock price opened at Rs. 351 and shot up to Rs. 361. It currently hovers around 380, after touching 390 levels.
The $ 144 million (Rs. 782 crore) acquisition of Singapore-based consumer goods company LD Waxson with major focus on skin care market and reports of winning a new IT deal worth Rs. 1000 crore also resulted in Wipro stock seeing huge fluctuations on Monday.
Wipro shares rose 3% before settling at 0.6% up at R381.85 on the BSE on Monday.
Meanwhile, Wipro sold its Sunflower Vanaspati brand to agribusiness company Cargill for an undisclosed amount as, under personal care division, it plans to focus on personal care, skin care, wellness and lighting.
“We have seen an upside of about 10% since Wipro announced de-merger. The impending corporate action will remain the main catalyst for the price movement for quite some time,” said Abhishek Shindakhar, an analyst with ICICI Direct.
In early November, the company said it will spin off non-core business, primarily consumer care business, into a separate entity Wipro Enterprise Ltd (WEL). More than three-forth of Wipro’s revenue is from IT business.
“Post de-merger, for every 100 shares, the minority shareholder will get 12 new shares and many investors find it attractive,” he said. It is not clear if Wipro will list the new entity.
“Wipro stock has been underperforming for a long time. The recent moves give confidence to investors that the company is taking definitive steps for future growth,” said Jagannadham Thunuguntla, head of research, SMC Global.