Paytm Board To Consider Its First Ever Share Buyback On Dec 13

At a time when its shares are on a free fall, One97 Communications Ltd, the parent of fintech giant Paytm, on Thursday said that its board will meet on December 13 to consider a proposal for share buyback.

“… we wish to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Tuesday, December 13, 2022 to consider a proposal for buyback of the fully paid-up equity shares of the company…,” Paytm said in a regulatory filing with the stock exchanges. 

Paytm said its management believes that the move would be beneficial for its shareholders considering the startup’s prevailing “liquidity/ financial position”.

Share buyback involves a company buying back its own shares from investors usually at a higher price than the prevailing market rate. 

The announcement comes at a tumultuous time for the fintech startup, with its shares facing a rout on the bourses. The expiration of its lock-in period for its pre-IPO investors last month led to a sell-off. Among the sellers was one of its major investors SoftBank, which recently offloaded 4.5% of its stake worth about $200 Mn in a bulk deal.

The shares of the fintech giant touched a record low of INR 439.60 on the BSE on November 24. Additionally, the startup has also been panned by critics for mounting losses. 

The fintech major reported a loss of INR 571 Cr in the second quarter (Q2) of the financial year 2022-23 (FY23), up 21% year-on-year (YoY). Revenue from operations soared 76% YoY to INR 1,914 Cr during the period under review.

In the last one month, Paytm shares have fallen by nearly 21% on the BSE. In one year since its listing, Paytm shares have lost more than 75% of their market value in what has been the world’s biggest single-year drop in share prices among large initial public offerings (IPOs) in the past 10 years.

However, brokerages continue to be bullish about Paytm. Shares of Paytm rose 8% intraday on December 2, a day after the company held a meeting with some analysts and investors. 

After the meeting, brokerage JM Financial upgraded Paytm shares to ‘buy’ from ‘sell’ and maintained its price target of INR 600. In the meeting, Paytm outlined its key growth drivers and said that it would focus on growing its lending business. 

On Thursday, shares of Paytm ended 0.28% lower at INR 508.40 on the BSE.