Paytm announces ₹850 crore share buyback

The maximum size of the buyback of equity shares from the open market route through the Indian stock exchanges is that of ₹850 crore, excluding buyback tax, at a price not exceeding ₹810 per share.

Paytm said the maximum buyback size is less than 10% of the aggregate of the total paid-up share capital and free reserves of the company as on 31 March, 2022.

Based on the minimum buyback size and maximum buyback price, the company would purchase a minimum of 5,246,913 equity shares, the company said in a release.

The share buyback comes less than 13 months after the loss-making digital payments major’s disastrous listing, which saw its shares tank 75% from its IPO price.

Through the IPO — the country’s largest back in November 2021 — Paytm had raised ₹18,300 crore by issuing fresh shares at ₹2,150 apiece.

To be sure, sell-side analysts have turned more positive on Paytm’s stock in recent weeks. According to Bloomberg, as many as eight of the 12 analysts tracking the stock recommend a buy or equivalent rating — the highest number since its trading debut.

Under a share buyback or repurchase, a company buys back its shares from investors or shareholders. Buyback is usually seen as an alternative, tax-efficient way to return money to shareholders.

The buyback reduces the number of shares in the market, increasing their value. The maximum limit for any buyback here in India is 25% of the aggregate paid-up capital and free reserves.

Touted as India’s largest-ever IPO at the time of its listing, Paytm’s offering attracted traditional global stock pickers such as BlackRock Inc. and the Canada Pension Plan Investment Board. Shares were sold at the upper-end of the price range of ₹2,080 to ₹2,150 per share as the issue strong demand from individuals and funds, although they never traded above the listing price.

Strong investor appetite was also seen for for other consumer technology companies as well — including online food delivery firm Zomato Ltd. and beauty products retailer Nykaa — despite questions over their profitability and valuations. But shares of these companies have come under pressure following the global meltdown in the technology sector, forcing a number of their early backers to exit or trim stakes.

The share price of One97 (Paytm) has fallen 75% from its IPO price. Shares of Paytm were trading 1.83% higher to settle at ₹538.40 apiece in late afternoon deals on BSE today.