Paytm board to consider share buyback next week

The company has a liquidity of ₹9,182 crore, according to its last earnings report. Liquidity of a firm is measured by its ability to covert assets into cash.

“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,” the digital payments and financial services company said in a regulatory filing.

The company also said that the outcome of the board meeting will be disseminated to the stock exchanges after conclusion of the meeting on 13 December.

“The management believes that given the company’s prevailing liquidity/ financial position, a buyback may be beneficial for our shareholders,” the company said.

Paytm has capped the worst first-year share plunge among large IPOs over the past decade. The digital payments platform, whose founder compared its challenges to those faced by Tesla shortly after the listing, has seen its stock erase 75% of its market value one year after its $2.4 billion offering, the largest on record at the time in India.

Paytm’s losses have deepened amid concerns over the emergence of a potential competitor owned by the country’s biggest conglomerate. Recently, Japan’s SoftBank Group Corp sold shares it held in the stock as a lock-up period set in the IPO expired, fuelling a three-day slide.

A share buyback, also known as share repurchase, is a corporate action to buy back its own outstanding shares from its existing shareholders usually at a premium to the prevailing market price.

Share buyback can be an alternative tax-efficient way to return money to shareholders. Share buybacks reduce the number of shares in circulation, which can increase the share value and the earnings per share (EPS).

The stock touched an all-time low of ₹441 last month. Shares of One 97 Communications Ltd were trading 0.32% lower at ₹508.25 apiece on the NSE in afternoon deals.