Wipro Ltd share prices fell by 12.2 per cent on Tuesday to close at Rs 393.8 per share on the first day of the split of Wipro Ltd into Wipros IT business and Wipro Enterprises (the non-IT business) became effective. The fall in the share price that led to a decline in its market cap by Rs 13,476 crore to Rs 96,987 crore on Tuesday is a result of the stocks of Wipro Ltd getting devoid of the non-IT business of the group including the FMCG business.
The company had announced the demerger of the diversified business of the company on November 1,2012 with effect from March 31. Wipro had set April 11,2013 as the record date for the purpose of determining the shareholders to whom securities of resultant company (Wipro Enterprises) would be allotted.
While April 11 has been set as the record date,Tuesday happened to be the ex-date beginning which Wipro stocks will only be valued for its IT business and it became ex-FMCG business, said Abhishek Shindadkar,IT analyst at ICICIdirect.
Thus the shares fell by up to 12.9 per cent during the day before recovering marginally to close the day with a fall of 12.2 per cent. In April 13,2012 Infosys saw its shares fall by 12.6 per cent.
Coming up with its decision to demerge the non-IT business,Wipro offered its shareholders three options. While the first option offered one equity share in Wipro Enterprises for every five shares of Wipro Ltd,the second option offered to give one 7 per cent redeemable preference share in Wipro Enterprises for every five equity shares of Wipro. The preference shares will have a maturity of 12 months and can be redeemed at a value of Rs 235.2.
In the third option the shareholders can convert Wipro Enterprise shares back into Wipro Ltd where they will get one share of Wipro Ltd for 1.65 shares of Wipro Enterprises.
For simplicity,for every 100 shares of Wipro Limited,shareholders would get additional 20 shares of Wipro Enterprises. They can,however,with the benefit of the third option,convert back the 20 shares of Wipro Enterprises into 12 shares of Wipro Ltd.