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Paytm's Board Approves Rs 850-Crore Share Buyback

Paytm's parent will repurchase shares through the open market route at up to Rs 810 apiece.

<div class="paragraphs"><p>A Paytm QR code scanner at a store. (Photo: Usha Kunji/BQ Prime)</p></div>
A Paytm QR code scanner at a store. (Photo: Usha Kunji/BQ Prime)

The board of Paytm's parent One97 Communications Ltd. approved a proposal to buy back equity shares worth Rs 850 crore.

The parent of the payments platform will repurchase 1.049 crore equity shares, representing 1.6% of the total paid-up share capital, according to an exchange filing. It will repurchase shares through the open market route at up to Rs 810 apiece. The maximum buyback price represents a 50% premium to Tuesday's closing price.

The company's management had earlier said that given the company’s "prevailing liquidity/financial position, a buyback may be beneficial for our shareholders".

The company will utilise at least 50% of the amount earmarked as the maximum buyback size, it said.

The digital payments provider said that its directors and key management personnel—including Vijay Shekhar Sharma, founder and chief executive officer; and Madhur Deora, president and chief financial officer—will not sell any shares during the buyback period.

The buyback plan comes as the company plans to cushion its investors after the company's stock lost 76% of its value from its IPO price of Rs 2,150, amid concerns over its path to profitability.

However, it reiterated that the proceeds from the IPO are not being
directed towards the share repurchase plan.

"While Paytm will continue disciplined investments to drive long-term value creation across technology, sales, marketing, and other areas, the Paytm board has determined that there is surplus liquidity that can be productively applied to a buyback of shares," it said.

The company further underscored that the buyback will not have any impact on its growth plans in the near future or on its profitability plans.

Paytm is rewarding shareholders when other new-age companies such as Nykaa have announced a stock split and bonus issue.

Of the 12 analysts tracking Paytm, eight maintain 'buy', three suggest 'hold' and one recommends 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 66.2%.